burberry. christian lacroix. lanvin. nickel. paul smith ... · positioning, clientele and, more...

Burberry. Christian Lacroix. Lanvin.Nickel. Paul Smith. Quiksilver. Roxy.S.T. Dupont. Van Cleef & Arpels.

Annual report two thousand & eight

Letter to our shareholders 02

Key figures 04

2008 milestones and 2009 outlook 06

The products 08

The market in 2008 28

The distribution network 30

Corporate governance 32

Corporate citizenship 34

Stock market 40

Consolidated financial highlights 42

Patronage 44

A sustained pace of development

In 2008, the Group successfully achieved another yearof sustained growth with consolidated sales of €265million, up 9.4% at current exchange rates and 14% atconstant exchange rates over 2007. This performancewas affected by particularly adverse euro/dollarexchange rate trends. This resulted in a negativecurrency effect on sales of close to €12 million despitea proactive hedging strategy.

Burberry fragrances continued to expand, driven by the successful worldwide launch of the new women’sfragrance Burberry The Beat and the strength of thebrand’s existing lines.

Lanvin fragrances significantly exceeded the year’sinitial targets through steady performances by the Éclat d’Arpège line in the second half and thelaunches of the Rumeur 2 Rose line in the spring and the Jeanne Lanvin line in the fall.

Van Cleef & Arpels fragrances also achieved excellentin response to the solid performances by the Firstline and the successful launch of the new women’sfragrance line, Féerie.

In a contracting market, launches of the Burberry TheBeat, Jeanne Lanvin and Féerie lines contributed togood performances in France.

Western Europe (excluding France) remained stable inlight of the challenging conditions in the UK andSpain.

The Middle East and Eastern Europe grew 30% and28% respectively.

North America grew 11% in volume (2% in value inlight of the US dollar’s weakness) despite the severity ofthe economic downturn in this region.

PHILIPPE BENACIN & JEAN MADAR

Letter to our shareholders

2 Inter Parfums annual report two thousand & eight . Letter to our shareholders

As in the previous year, by maintaining tight controlover all expenses, the Group considerably limited theimpact of adverse foreign exchange trends. As a result,operating profit expanded nearly 8% resulting in anoperating margin approaching 13%. In line with itsmedium-term development strategy, the Group pursuedmarketing and advertising spending (+5%).

Net income exceeded €21 million with a net marginof 8%, a particularly high level for the perfume andcosmetics industry.

Finally, the Group continues to have a very solidfinancial position with shareholders’ equity of €155million and limited net financial debt of €4 million atDecember 31, 2008.

Despite the relatively mixed picture provided byinformation received on the market and reduced

visibility, we remain optimistic on the Group’sprospects for development over the medium term.

The excellent quality of our brand portfolio and thenew product pipeline, our balanced geographical salesmix, the quality of our business model and theprofessionalism, energy and creativity of our teamsshould permit us to maintain profitability atsatisfactory levels in 2009.

Philippe Benacin & Jean Madar

3Inter Parfums annual report two thousand & eight . Letter to our shareholders

(in € thousands) 2004 2005 2006 2007 2008

Sales 157,426 194,442 216,235 242,123 264,864% international 91% 92% 92% 91% 90%

Income from operations 24,207 25,913 29,182 31,812 34,259% operating margin 15.4% 13.3% 13.5% 13.1% 12.9%

Résultat net part du groupe 15,518 16,295 18,694 20,193 21,119% net margin 9.9% 8.4% 8.6% 8.3% 8.0%

Shareholders’ equity 82,665 98,049 115,795 134,233 155,928

Net cash 15,857 34,390 44,072 56,113 26,304

Total assets 143,398 172,078 223,401 271,544 262,064

Workforce (at December 31) 90 112 128 145 152

Sales (1) Income from operations (1) Net income (1) Total dividends

4 Inter Parfums annual report two thousand & eight . Key figures

05

264.9

242.1

216.2

194.4 25.9

16.3 3.6

29.2

18.7

4.1

31.820.2

4.6

34.3 21.1 4.8

06 07 08 05 06 07 08 05 06 07 08 05 06 07 08

YEAR 2008

Key figuresThe gross margin as a percentage of sales (57.6% in 2008)

remains high despite adverse foreign exchange trends and provisions for Roxy inventory write-downs.

In line with our medium-term development strategy, the Group pursued marketing and advertising spending (+5%)

while successfully maintaining tight control of all expenses. As a result, operating profit for 2008 expanded nearly 8%

compared to 2007 with an operating margin approaching 13%.

Growth in net income was limited by two factors:- Increased financial expenses in connection with

the acquisition of Lanvin trademarks;- The fair value recognition of financial instruments

(US dollar hedges for 2009 and interest rate swaps on bank debt) for a total of €1.2 million before tax.

Balance sheet highlights (1)

5Inter Parfums annual report two thousand & eight . Key figures

The Group has a very solid financialposition with shareholders’ equity of €155 million and limited net financial debt of €4 million at 31 December 2008.

The decline in cash reflects primarilyan intentional policy to maintain highinventory levels making it possible to fill virtually all orders received.

(1) Consolidated data in € millions

69.8Non-current

assets

161.9Current assets

26.3Net cash

155.8Shareholders’equity

30.0Long term debt

72.2Current liabilities

Assets Liabilities

6 Inter Parfums annual report two thousand & eight . 2008 milestones and 2009 outlook

2008 MILESTONES AND 2009 OUTLOOK

A sustainedpace of developmentJUNE JULYJANUARY / MARCH

Creation of a new subsidiaryOn June 16, 2008, Inter Parfumscreated a new wholly-owned subsidiary in Switzerland. At the same time, Inter Parfumscontributed its proprietaryLanvin trademarks and brands to this new entity. An exclusivelicense agreement was concludedbetween Inter Parfums Suisse andInter Parfums effective July 1, 2008.

Bonus share issueOn June 18, 2008, the companyproceeded with a bonus issue on the basis of one new share forevery ten shares held.

Launch of The Beat line of BurberryThe launch of the new women’s fragranceline Burberry The Beat was a high point ofthe first quarter, with very rapid productturnover and initial order renewals atpoints-of-sale.

Extension of the Paul Smithlicense agreementIn December 1998, Paul Smithand Inter Parfums signed a 12-year agreement to create andproduce perfumes and cosmeticsunder the Paul Smith brand anddistribute them worldwide. InJuly 2008 this agreement wasextended for an additional sevenyears through December 31, 2017on the basis of comparable termsand conditions.

Launch of the JeanneLanvin line of LanvinTo render homage to the founderof France’s first fashion house,Alber Elbaz reconciled modernityand femininity with a newfragrance, Jeanne Lanvin, bothpoetic and elegant, launched inJuly 2008.

7Inter Parfums annual report two thousand & eight . 2008 milestones and 2009 outlook

SEPTEMBER OCTOBER 2009 OUTLOOK

Signature of an agreementwith Rafael Nadal for LanvinOn September 30, 2008, Inter Parfums and Rafael Nadalsigned a major internationalagreement to promote thedevelopment of Lanvin fragrances.the world’s number one tennisplayer will become the standard-bearer for the Lanvin L’HommeSport line to be launched in thesummer of 2009.

Launch of the Féerie lineof Van Cleef & ArpelsEntirely inspired from the magicaluniverse of Van Cleef & Arpels, theFéerie line, launched in Septemberconfirms with brilliance its manifestconnection with the fine jeweler.The same poetry, imaginary world,and exclusive luxury. A pure objectof desire, Féérie, launched inSeptember 2008, conjuring up aspectacular universe illuminated bystars, fairy wings and enchanteddreams.

Merger by absorption of NickelOn October 1, 2008, Nickelbecame a wholly-owned subsidiaryof Inter Parfums through a simplifiedmerger procedure involving thetransfer of its assets and liabilitiesto the latter (Transmission Universellede Patrimoine).

Multiplying growth initiativesThe company targets sales of €273 million for 2009 throughan ambitious program of launches that will boost revenue fromexisting lines: Burberry The Beat Men, Lanvin L’Homme Sport,Paul Smith Men and Van Cleef Collections Extraordinaires.

THE PRODUCTS

The creativeprocessThe creation and marketing of each product line are intimately linked to the brand, its history, positioning, clientele and, more generally, its universe.

The company creates, manufactures and distributes prestige perfumes through license agreements with leading brands in the high-end ready-to-wear, high fashion, jewelry and accessories sectors.

Inter Parfums’ success is based on long-term partnerships with brands, customers and suppliers, proven expertise in developing and marketing products and production processes and a streamlined organization that outsources packaging and logistics.

The product launch process is the cornerstone of the company’s successful record of growth and expansion. For this reason, the decision to launch a new line is made very early on in the process: the cycle of market research up to the product launch may range between 12 and 18 months.

The success of a product is based on the combination of a good dose of creativity and achieving an optimal fit between the following key components of the marketing mix: the brand’s overall positioning, its “juice”,the bottle, packaging, and marketing strategy.

In July 1993, Inter Parfums entered into an exclusive 10-year license agreement with Burberry Ltd. to create and produce perfumes under the Burberry name and distribute them worldwide, followed by an initial 3-year extension in 2000.

In October 2004, Inter Parfums signed a new agreement for 12.5 years effective July 1, 2004 with an option for an additional five years subject to mutual agreement of the parties.

Lines distributed are: Burberry (1995), Burberry Week end (1997), Burberry Touch (2000),Burberry Brit (2003/2004), Burberry London (2006), Burberry The Beat (2008) and Burberry The Beat Men (2009).

Burberry fragrances had sales in 2008 of €169 million, up 10.5%, boosted by the successful worldwide launch of the women’s fragrance line Burberry The Beat and solid performances by the brand’s existing lines and represented 63.8% of total revenue.

11Inter Parfums annual report two thousand & eight . Burberry products

2008 awards

Best Fragrance for Burberry The Beat by the Cosmopolitan Beauty Award 2008

Burberry The Beat(2008)

Burberry Summer(2007)

Burberry London(2006)

Burberry The Beat Men(2009)

Burberry Brit(2004/2003)

Burberry Brit Sheer(2007)

12 Inter Parfums annual report two thousand & eight . Burberry products

Burberry Touch(2000)

Burberry Weekend(1997)

Burberry(1995)

Burberry Baby Touch(2002)

13Inter Parfums annual report two thousand & eight . Burberry products

In July 2004, Inter Parfums entered into an exclusive 15-year license agreement with the company Lanvin to create, develop and distribute fragrances worldwide under the Lanvin name.

On July 31, 2007, Inter Parfums SA acquired the Lanvin brand names and international trademarks for class 3 fragrance products and make-up from the Jeanne Lanvin S.A. company. On the same date,the two companies mutually agreed to terminate the existing licensing contract signed in June 2004.

Lines distributed are: Arpège (1927), Lanvin L’Homme (1997), Éclat d’Arpège (2002), Arpège pour Homme (2005), Rumeur (2006), Rumeur 2 Rose (2007), Jeanne Lanvin (2008) and L’Homme Sport (2008).

Lanvin fragrances had sales in 2008 of €39 million, with steady performances by the Éclat d’Arpège line and contributions from the launch of Rumeur 2 Rose in the spring and Jeanne Lanvin in the fall (14.7% of total revenue).

Rumeur(2006)

Rumeur 2 Rose(2007)

Jeanne Lanvin(2008)

Arpège pour Homme(2005)

Éclat d’Arpège(2002)

Lanvin L’Homme(1997)

Arpège(1927)

14 Inter Parfums annual report two thousand & eight . Lanvin products

At the end of September 2006, the Van Cleef & Arpels and Inter Parfums groups signed a worldwide license agreement to manufacture and distribute perfumes and related products under the Van Cleef & Arpels brand name with a 12-year term that took effect on January 1, 2007.

Lines distributed are: First (1976), Van Cleef pour Homme (1978), Tsar (1989), Van Cleef (1994), First 1er Bouquet (2008) and Féerie (2008).

Van Cleef & Arpels had sales in 2008 of €21 million, advancing 77% in relation to 2007, boosted by the good performance of First and the successful launch of the new women’s fragrance line, Féerie (7.9% of total revenue).

First(1976)

Féérie(2008)

Premier Bouquet(2008)

Pour homme(1978)

Van Cleef(1994)

Tsar(1989)

17Inter Parfums annual report two thousand & eight . Van Cleef & Arpels products

In December 1998, Inter Parfums entered into an exclusive 12-year license agreement with Paul Smith to create and produce perfumes and cosmetics under the Paul Smith name and distribute them worldwide.

In July 2008, this agreement was extended for seven years until December 31, 2017 on the basis of comparable contractual terms and conditions.

Lines distributed are: Paul Smith (2000), Paul Smith Extrême (2002),Paul Smith London (2004), Paul Smith Story (2006) and Paul Smith Rose (2007).

Paul Smith fragrances had sales in 2008 of €13 million (5.1% of total revenue).

Paul Smith Rose(2007)

Paul Smith Story(2006)

Paul Smith Floral(2005)

Paul Smith Extrême(2002)

Paul Smith Classic(2000)

18 Inter Parfums annual report two thousand & eight . Paul Smith products

In June 1997, Inter Parfums entered into an exclusive 11-year agreement with S.T. Dupont to create and produce perfumes under the S.T. Dupont name and distribute them worldwide.

In April 2006, this agreement was extended for an additional three years, i.e. until June 30, 2011.

Lines distributed are: S.T. Dupont (1998), S.T. Dupont Essence Pure (2002),S.T. Dupont Noir (2006), S.T. Dupont Blanc (2007) and S.T. Dupont Passenger (2008).

S.T. Dupont fragrances had sales in 2008 of €11.5 million (4.3% of total revenue).

S.T. Dupont Passenger(2008)

S.T. Dupont Blanc / Noir(2007/2006)

21Inter Parfums annual report two thousand & eight . S.T. Dupont products

S.T. Dupont Essence Pure(2002)

S.T. Dupont(1998)

In March 2006, Inter Parfums concluded an exclusive 12-year worldwide license agreement with Quiksilver Inc. for the creation, development and distribution of fragrance, sun care, skincare and related products under the Roxy and Quiksilver brands that runs through December 31, 2017.

In September 2007, the license agreement was extended to men’s fragrances under the Quiksilver brand.

Lines distributed are: Roxy (2007), Roxy Love (2008) and Quiksilver (2009).

Roxy and Quiksilver fragrances had sales in 2008 of €7.4 million, up 12% over 2007 (2.8% of total revenue).

Roxy Love(2008)

Roxy(2007)

22 Inter Parfums annual report two thousand & eight . Roxy and Quiksilver products

Quiksilver(2009)

In April 2004, Inter Parfums acquired a majority stake in Nickel, a company specialized in skincare products for men. In June 2007, Nickel became a wholly-owned subsidiary after Inter Parfums acquired company’s remaining shares.

Nickel had revenue in 2008 of €2.7 million (1.0% of total revenue).

Silicon Valley by Night / by Day(2008)

Super Pecs(2008)

Poignées d’Amour(1999)

Lendemain de Fête(1996)

Super Clean Soft(2008)

Super Speed(2007)

Attention les Yeux(1997)

Bonne Gueule Brun(1996)

25Inter Parfums annual report two thousand & eight . Nickel products

Sales by brand

In € millions 2004 2005 2006 2007 2008As a % of total sales

Burberry 118.8 131.3 143.3 152.9 169.075.5% 67.5% 66.3% 63.2% 63.8%

Lanvin 7.6 29.5 34.4 33.3 39.04.8% 15.1% 15.9% 13.8% 14.7%

Van Cleef & Arpels - - - 11.9 21.0- - - 4.9% 7.9%

Paul Smith 14.3 14.5 17.7 18.0 13.49.1% 7.5% 8.2% 7.4% 5.0%

S.T. Dupont 8.9 8.8 10.1 11.1 11.55.7% 4.5% 4.7% 4.6% 4.3%

Roxy/Quiksilver - - - 6.6 7.4- - - 2.7% 2.8%

Nickel 1.7 3.1 4.1 3.3 2.71.1% 1.6% 1.9% 1.4% 1.1%

Other 6.1 7.2 6.6 5.0 0.93.8% 3.8% 3.0% 2.0% 0.4%

Total 157.4 194.4 216.2 242.1 264.9

Consolidated sales for fiscal 2008 totaled €264.9 million, up 9.4% at current exchange rates and 14.2% at constant

exchange rates over 2007.

Burberry fragrances continued to expand with annual sales of nearly€170 million, up 10.5% at current exchange rates and 16.3% at

constant exchange rates, driven by the successful worldwide launchof the new women’s fragrance Burberry The Beat and the strength

of the brand’s existing lines.

With sales advancing 17% to €39 million, Lanvin fragrancessignificantly exceeded the year’s initial targets through steady

performances by the Éclat d’Arpège line in the second half and thelaunches of the Rumeur 2 Rose line in the spring and

the Jeanne Lanvin line in the fall.

Van Cleef & Arpels fragrances also achieved excellent results withsales of €21 million, up 77% over 2007 in response to the solid

performances by the First line and the successful launch of the newwomen’s fragrance line, Féerie.

28 Inter Parfums annual report two thousand & eight . The market

THE MARKET

Significantinternationalsales

29Inter Parfums annual report two thousand & eight . The market

FranceThe French spent less on perfumes andcosmetics in 2008: sales of perfume productsand cosmetics by specialized traditional outlets,independent shops and major stores in Francerose 2.5% to €6.56 billion, less than in 2007(+4%) and 2006 (+5%). Growth in volumesremained flat (0% to +1%) and in large partprice-driven. Growth of 1.5% is forecasted in2009 in value terms on the assumption of amacroeconomic recovery in the second half.Price increases should be limited in response to greater price consciousness of consumers.

Source: Precepta

International marketsIn the United States, the total U.S. beautyindustry declined 3.3% in dollar sales toUS$8.4 billion. The steepest decline wasregistered by fragrances (-6%), with make-upalso contracting while skincare, boosted by theanti-aging segment, remained steady. In themass-market channel in the US perfumes alsocontracted while make-up and skincare managedto grow. The slowdown reflects both a contractionin the number of users but also in frequency ofuse. The study also indicated that the UnitedStates was the market most affected by thedownturn. In contrast, Italy declined only 0.5% while sales in China registered stronggrowth of 17.2%.

Source: NPD Group

Market shareIn France, Inter Parfums attained roughly a 2%share of the selective distribution market ofprestige perfumes. In certain countries such asthe United States, the United Kingdom, Russiaor China, the company estimates its marketshare of total French perfume imports at between1% and 4%.

Source: Internal estimates

CompetitionIn an industry highly concentrated aroundmajor players with billions of euros in sales,Inter Parfums pursues an unique strategy ofsteadily and methodically developing a portfolio of perfumes for selective distributionbased on internationally renowned brands.

Although Inter Parfums’ closest competitors donot develop mass market or cosmetics products,several large corporations have perfume divisionswith comparable strategies.

30 Inter Parfums annual report two thousand & eight . The distribution network

AMERICA ASIAEUROPE MIDDLE EASTArgentina

Greta

BrazilEximbiz Comercio Intl

CanadaClarins Canada

ColumbiaGrupo Wisa

United StatesProcter & Gamble

MexicoAntera

25.4%of sales (with 18.7% in the US)

€67.4 M

ChinaEternal Optical

South KoreaTdco Ltd

JapanBluebell

Singapore and TaiwanLuxasia

12.8%of sales

€33.9 M

GermanyInter ParfumsDeutschland Gmbh

SpainInter Espana Parfumset Cosmétiques SL

ItalyInter Parfums Srl

PortugalLuso Helvetica

United KingdomInter Parfums Ltd,Kenneth Green

RussiaKurs

TurkeyTe Ha Guzellik

42.1%of sales (with 32.2% in Western Europe)

€111.6 M

Saudi ArabiaRadwaNational Marketing

DubaiCréation AlexandreGhadeer Trading

KuwaitHabchi ChalhoubWahran Trading

9.1%of sales

€24.2 M

THE DISTRIBUTION NETWORK

Multiple and diversifiedchannels Present in more than 100 countries

with international markets accounting for more than 90% of sales

31Inter Parfums annual report two thousand & eight . The distribution network

InternationalInternational distribution

is assured through:- independent companies,

- subsidiaries of major luxury goods corporations,

- duty-free operators (airports, airlines,etc.), that have exclusive rights

to distribute one or more of the company’s brands in a

specific territory.

FranceThe French sales team handles French

distribution directly. The network of salesoutlets breaks down as follows:

- integrated chains (Sephora,Marionnaud, Nocibé…),- franchise stores (Beauty

Success, Passion Beauté, …),- department stores (Galeries

Lafayette, Printemps…),- traditional perfumeries.

The French sales team also handles merchandising (shelf management, product

placement in stores, sales promotion andevent planning) that is a key contributor to

the company’s development.

CORPORATE GOVERNANCE

Board of DirectorsandManagementcommitteeInter Parfums adopted the form of a société anonyme, the French equivalent of a joint stock company, when it was created in 1989. It is governed by a Board of Directors and a Management Committee.

32 Inter Parfums annual report two thousand & eight . Corporate governance

As of December 31, 2008 the composition of the Board of Directors was as follows:

Philippe BenacinChairman and Chief Executive Officer ofInter Parfums (appointment renewed April 23,2004, expiring at the close of the 2010 annualshareholders’ meeting)

Jean MadarDirector (appointed 23 April 2004, expiring at the close of the 2010 annual shareholders’ meeting)

Maurice AlhadèveIndependent Director (appointed by the shareholders’ meeting of April 23, 2004,expiring at the close of the 2010 annual shareholders’ meeting)

Michel DyensIndependent Director (appointed by the shareholders’ meeting of April 23, 2004,expiring at the close of the 2010 annual shareholders’ meeting)

Jean LevyDirector (appointed by the shareholders’ meetingof April 23, 2004, expiring at the close of the2010 annual shareholders’ meeting)

Patrick ChoëlDirector (appointed by the shareholders’ meetingof December 1, 2004, expiring at the close of the2010 annual shareholders’ meeting)

Chantal RoosIndependent director (appointed by co-optationby decision of the Board of Directors’ meeting ofNovember 22, 2008 subject to ratification by thenext general meeting to be held on April 24,2009)

Catherine Bénard-LotzDirector (holder of an employment contractpreceding the appointment by the shareholders’meeting of April 23, 2004, expiring at theclose of the 2010 annual shareholders’ meeting)

Frédéric Garcia PelayoDirector and Executive Vice President (appointed by co-optation by decision of theBoard of Directors’ meeting of November 22,2008 subject to ratification by the next generalmeeting to be held on April 24, 2009)

Philippe SantiDirector and Executive Vice President(holder of an employment contract precedingthe appointment by the shareholders’ meetingof April 23, 2004, expiring at the close of the2010 annual shareholders’ meeting)

Management Committee members, left to right: Philippe Santi, Jérôme Thermoz, Philippe Benacin, Hugues de la Chevasnerie, Angèle Ory-Guénard, Axel Marot and Frédéric Garcia-Pelayo

The composition of theManagement Committee onDecember 31, 2008 was as follows:

Philippe BenacinChairman and Chief Executive Officer

Philippe SantiExecutive Vice President,Chief Financial & Administrative Officer

Frédéric Garcia-PelayoExecutive Vice President,Chief International Officer

Hugues de la ChevasnerieVice President, Burberry Fragrances

Angèle Ory-GuénardVice President, Export Sales,Burberry Fragrances

Jérôme ThermozVice President, French Distribution

Axel MarotVice President, Production & Logistics

Board of Directors Management committee

33Inter Parfums annual report two thousand & eight . Corporate governance

CHAIRMAN AND CHIEF EXECUTIVE OFFICERPh. Benacin

Workforce at December 31 2006 2007 2008

Total workforce 128 145 152

Officers and managers 68 77 82Supervisory staff - - 9Non-management employees 60 68 61

Average age 36 years 36 years 37 yearsAverage seniority 6 years 6 years 6 yearsTurnover 4.5% 4.7% 6.3%

34 Inter Parfums annual report two thousand & eight . Corporate citizenship

CORPORATE CITIZENSHIP

Social responsibility

Organization at March 1, 2009

Inter Parfums’ corporate valuesOver the years, Inter Parfums has developed a corporate culture based on promoting creativity, teamwork, a spirit of trust and corporate responsibility. Inter Parfums management and employees share strong values in respect to working conditions,equal opportunity employment, respect, fighting discrimination and employee training. These values that today represent the foundations for sustainable growth reflect the contribution of the cultural diversity and rich experience of our workforce.

The productionprocess combines highquality and strictcompliance withdeadlines essential toproduce several millionunits a year. A team of22 under Axel Marotmanages sourcing,supplier relations,quality assurance andcost control andoperations.

Reflecting the volumeof business of thebrand and distinctterms and conditionsof the licenseagreement, theBurberry Fragrancesdivision is specificallydevoted to marketingand internationaldistribution of thisbrand. It has 29employees and isheaded by Hugues deLa Chevasnerie.

Frédéric Garcia-Pelayoleads a dedicated teamof 25 professionalsresponsible for productdevelopment,marketing andinternationaldistribution for theLanvin, Paul Smith,Van Cleef & Arpels,Quiksilver, Roxy, S.T.Dupont and ChristianLacroix brands.

Reflecting thespecificities of theNickel brand, itsproduct developmentand marketing aremanaged by the Luxe& Fashion division.

Jérôme Thermoz’s staffof 47 handles thecompany’s distributionstrategy and mana-gement, contractnegotiations andmonitors profit marginsand advertisingexpenditures inFrance.

Management of theNickel spas is assuredby a team of 8 that arepart of the FrenchDistribution division.

Philippe Santi heads astaff of 27 responsiblefor financial strategyand communications,investor relations,accounting, budgets,cost accounting, laborrelations, tax and legalservices, cashmanagement andcollection.

PRODUCTION & LOGISTICS

A. Marot22 employees

BURBERRYFRAGRANCES

H. de La Chevasnerie29 employees

LUXE& FASHION

F. Garcia-Pelayo25 employees

FRENCHDISTRIBUTION

J. Thermoz47 employees

FINANCE & CORPORATEAFFAIRS

Ph. Santi27 employees

INTER PARFUMSSRL

Italy

PHILIPPE BENACINJEAN MADAR

INTER PARFUMS INC.Nasdaq - New York

INTER PARFUMSLTD.

United Kingdom

INTER PARFUMS SAEuronext - Paris

FREE FLOAT

35Inter Parfums annual report two thousand & eight . Corporate citizenship

The ownership structure of Inter Parfums Inc. broke down as follows at December 31, 2008

Inter Parfums and its subsidiariesCommercial operations are conducted primarily through Inter Parfums SA. To pursue its international development, Inter Parfumsset up new distribution subsidiaries on January 1, 2007 in the key European markets of Germany, Spain, Italy and the United Kingdom. These subsidiaries are 51%-owned by Inter Parfums and 49%-owned by local distributors. Inter Parfums also created a wholly-owned subsidiary in Switzerland, Inter Parfums Suisse Sarl. This subsidiary is the owner of the Lanvin brandname and international trademarks for class 3 products.

Inter Parfums and its parent companyFounded in 1985, the U.S. company Inter Parfums Inc. is listed on NASDAQ and has business activities in two areas:- mass market perfumes aimed mainly at the U.S. consumer market and developed by its wholly owned U.S. subsidiary, Jean-Philippe Fragrances LLC,- prestige perfumes aimed at the global selective perfumes market and developed by its French subsidiary, Inter Parfums (75% owned at December 31, 2008 via Inter Parfums Holding).

The US company develops and sells products under license agreements principally under the Gap, Banana Republic, New York & Company, Brooks Brothers and Bebe brands.

FREE FLOAT

consolidated financial highlights (in $ millions) 2004 2005 2006 2007 2008

Sales 236.0 273.5 321.1 389.6 446.1

Net income 15.7 15.3 17.7 23.8 23.8

Shareholders’ equity 126.5 127.8 155.3 192.7 204.2

Net cash 41.0 59.5 71.0 90.0 42.4

1 Euro = 1,3917 USD at December 31, 2008

52%

75%

51%

INTER PARFUMSSUISSESARL

Switzerland

100%

INTER PARFUMSDEUTSCHLAND

GMBHGermany

51%

INTER ESPANAPARFUMS &

COSMÉTIQUE SLSpain

51% 51%

25%

48%


The environmentInter Parfums’ business focuses principally on thecreation and distribution of products. For this reason,the entire production process is outsourced to manu-facturing partners. These include producers of juice,glass, caps and cardboard boxes and packaging companies.With no production activities of its own, Inter Parfumsdoes not own laboratories or manufacturing sites.

Even though it operates in a sector less polluting thanother industries, Inter Parfums is committed topreserving the environment and quality of life. For thisreason, it remains involved in the production processand coordinates with all subcontractors and supplierswho manufacture its products and are directlyresponsible for their impact on the environment.

Low energy requirementsInter Parfums’ consumption of water and energy islimited to normal office usage in the administrativepremises of its headquarters, that house 111 employees.Other water and energy consumption concern the salesoffices and commercial teams in the field that represent41 employees out of 152.

RecyclingThe company constantly strives to reduce the alreadylow impact of its business on the environment byinvesting in the treatment and recycling of the packages,cardboard boxes and glass left once its customers havefinished using its products. With this objective, throughits participation in the “Eco Emballage” packagingrecycling program, Inter Parfums contributes to wastemanagement and recycling.

The minimization of environmental impact

To balance product quality and aesthetics withenvironmental considerations, Inter Parfums takes careto reduce packaging volumes at the source and select theappropriate materials at each stage of production toensure optimal conditions for their recycling or disposal.Accordingly, Inter Parfums selects partners using cutting-edge design techniques with a commitment to reducethe impact of manufacturing processes on theenvironment.

The bottles of its products are made of recyclable glassand the production process provides for a system ofrecuperation, grinding and recasting of certain bottlecomponents, which generates savings in volume ofmaterials used of 20%. A biodegradable water-solublesolution that does not harm the environment is used inthe coloring of some of its bottles. The process of coatingused for certain products is compliant with the law of2005 destined to reduce emissions of volatile organiccompounds (VOC) in the air by the use of “hydrocoating”. This commitment to environmentalresponsibility is also a criteria in selecting subcontractors.

A commitment to well-beingEven though Inter Parfums does not manufacture itsproducts itself, it nevertheless ensures their introductionon the market and is consequently responsible forensuring their inoffensiveness to the skin and eyes.Within this framework, it ensures that its products arenot subject to any tests on animals and maintains ascientific watch for the development of “alternative” testsand cell culture tests. It also ensures compliance with

CORPORATE CITIZENSHIP

The environment


national and European regulations and notably the“Cosmetics Directive” which prohibits the use of certainanimal derivatives.

Inter Parfums has taken measures for the application ofthe new European Community Regulation on chemicalsand their safe use concerning the Registration, Evaluation,Authorization and Restriction of Chemical substances(EC Directive 1907/2006 of December 18, 2006) orREACH with its suppliers. All technical andorganizational measures to be applied following theadoption of REACH have been implemented by thecompany.

The pre-registration phase of REACH ended onDecember 1, 2008. During this period, importers andmanufacturers of “phase-in” substances were required toregister the substances once volume exceeds one ton peryear. Pre-registration makes it possible to obtain additionaldelays in connection with the registration procedure.

Inter Parfums, as a downstream user of chemicalsubstances is not subject to the registration requirement.However, it has sought to maintain an active role toensure that the registration process proceeds effectivelyand the continuous supply for the sourcing chemicalsubstances contained in its products.

Inter Parfums took the initiative to contact its differentsubcontractors to ensure they and those further down inthe supply chain effectively comply with registration,notification or authorization request procedures. InterParfums has asked all its suppliers to providecommitments that that they will not supply articlescontaining substances listed in appendix XIV(Substances of Very High Concern). To date, no supplierhas declared the presence in articles provided to Inter

Parfums of substances that are candidates forauthorization.

Information relating to REACH including notably riskmanagement measures transmitted through security datafiles will be taken into account by Inter Parfums or itssuppliers as they are issued.

For information, the deadlines for the implementationof REACH are spread over the period from June 1,2008 to June 1, 2018.

Inter Parfums’ actions in this area exceed that of a simplecoordinator by increasing its partners’ awareness ofenvironmental issues and staying informed of thebusiness practices of its subcontractors and suppliers,highlighting its commitment to environmentalresponsibility

STOCK MARKET

ShareholderinformationSince it was listed on the EuroNext Paris Second Market in November 1995, Inter Parfums regularly provides investors and the financialcommunity with information on its situation in compliance with the principles of transparency and the best practices in financialcommunications. This information is provided through a variety documents and media that includes an annual report, a semi-annualreport, a letter to shareholders, press releases and financial notices, a web side www.interparfums.fr, individual and group meetings withfinancial analysts, fund managers, journalists, individual shareholders and other.

40 Inter Parfums annual report two thousand & eight . Stock market

Dividends 2004 2005 2006 2007 2008

Dividend per share (1) €0.25 €0.28 €0.31 €0.35 €0.38

Annual increase (1) +26% +10% +15% +11% +9%

Average number of shares outstanding (2) 5.2 M 9.0 M 10.4 M 11.5 M 12.7 M(1) In light of bonus shares (2) Excluding treasury shares

Share price and trading volume data

2000 2002 2004 2006 2008 20091999 2001 2003 2005 2007

60035

50030

Trading volume data in thousandsInter Parfums share in euros and CAC Small 90 (relative)

40025

30020

20010

1000

-50-10

41Inter Parfums annual report two thousand & eight . Stock market

Year 2008

In an environment of highly volatileequity markets, the Inter Parfumsshare showed resilience throughoutthe 2008 first half, declining 18%compared to a downturn of morethan 25% for the CAC Small 90benchmark for mid caps.

In September 2008, marked by thedownturn in all financial markets,this trend continued despite thepublication of good half year performances and on October 27,2008, the share retreated to its lowof the year of €17.

The publication of third-quartersales and the 2009 outlook failed toreverse this trend and the shareended the year at €18.05.

For the full year, the share declined37% in consequence comparedwith more than 50% for the CACSmall 90 benchmark.

Ownership as of December 31, 2008

Inter Parfums has almost 5,400 individual shareholders and nearly 160 institutional shareholders (nearly half of which are not French).

Institutions providing financial research on Inter Parfums

Berenberg, CA, Cheuvreux, ESN-CM CICSecurities, Fortis Bank, Gilbert Dupont, HSBCSecurities, ID Midcaps, Natixis Securities, OddoSecurities and Société Générale

Upcoming publications

2009 second-quarter salesJuly 23, 2009

2009 first-half sales and earningsSeptember 7, 2009

2009 third-quarter salesMid-October 2009

2009 letter to shareholdersMid-November 2009

2009 annual salesMid-January 2010

2009 sales and earningsMid-March 2010

Upcoming events

Presentation of 2009 first-half earningsSeptember 8, 2009

MidCaps Events trade show, ParisSeptember 21 & 22, 2009

Actionaria trade show, ParisNovember 20 & 21, 2009

Securities market information

Market: Euronext ParisMarket segment: Euronext compartiment BIPO date: November 1995ISIN code: FR0004024222 ITPIndexes: MidCac, CAC Small90, SBF250Market maker: Oddo Securities

75% 25%

Inter Parfums Inc. Public

42 Inter Parfums annual report two thousand & eight . Financial highlights

FINANCIAL HIGHLIGHTS

Condensedfinancial statementsCONSOLIDATED INCOME STATEMENT

In € thousands, except per share data which is in units 2007 2008

Sales 242,123 264,864

Cost of sales (94,694) (112,308)Gross margin 147,429 152,556

% of sales 60.9% 57.6%

Selling and administrative expenses (114,795) (117,731)Income from current operations 32,634 34,825

% of sales 13.5% 13.1%

Other operating income and expenses (822) (566)Income from operations 31,812 34,259

% of sales 13.1% 12.9%

Net financial expense (836) (2,752)

Income before income tax 30,976 31,507

% of sales 12.8% 11.9%

Income tax (11,158) (10,924)Effective tax rate 36.0% 34.7%

Net income before minority interests 19,818 20,583

% of sales 8.2% 7.8%

Attributable to minority shareholders (375) (536)Net income 20,193 21,119

% of sales 8.3% 8.0%

43Inter Parfums annual report two thousand & eight . Financial highlights

Consolidated balance sheet

In € thousands 2007 2008

ASSETS

Non-current assetsNet trademarks and other intangible assets 66,291 63,361Net property, plant, equipment 3,368 4,162Non-current financial assets 540 478Deferred tax assets 2,482 1,743Total non-current assets 72,681 69,754

Current assetsInventories and work in progress 56,346 70,794

Trade receivables and related accounts 75,610 80,054

Other receivables 6,491 11,082Cash and cash equivalents 60,416 30,380Total current assets 198,863 192,310

Total assets 271,544 262,064

SHAREHOLDERS’ EQUITY AND LIABILITIES

Shareholders’ equityCommon stock 36,301 40,176Additional paid-in capital 1,046 265Retained earnings 76,693 94,368Net income for the year 20,193 21,119Total group shareholders’ equity 134,233 155,928

Minority interests (342) (166)Total shareholders’ equity 133,891 155,762

Non-current liabilitiesProvisions for non-current commitments 546 712Non-current borrowings 29,527 19,803Other non-current debt - -Deferred tax liabilities 1,734 3,636Total non-current liabilities 31,807 24,151

Current liabilitiesTrade payables and related accounts 65,195 52,866Current borrowings 11,006 10,271Commitments and contingencies 2,280 2,280Short-term bank loans 4,303 4,076Other liabilities 23,062 12,658Total current liabilities 105,846 82,151

Total shareholders’ equity and liabilities 271,544 262,064

44 Inter Parfums annual report two thousand & eight . Photos: Enguerran Ouvray. Creation: Agence Marc Praquin

INTER PARFUMS

Patron of the EnsembleMatheusInter Parfums wanted to associate its name and image withthe Ensemble Matheus, led by conductor by Jean-Christophe Spinosi,with the signature of a sponsorship agreement for 2009.

“Une leçon de Musique” concert performance, Customer convention, Évian, January 26, 2009

4 rond-point des Champs Élysées75008 ParisTel. +33 1 53 77 00 00

www.inter-parfums.fr

Burberry. Christian Lacroix. Lanvin.Nickel. Paul Smith. Quiksilver. Roxy.S.T. Dupont. Van Cleef & Arpels.

Financial report two thousand & eight

Consolidated management report 02

Consolidated financials 14

Corporate governance 42

Shareholder information 60

History of the company 72

Auditors and responsibility statements 74

A sustained pace of development

2 Two thousand eight registration document Inter Parfums. Consolidated management report

CHAPTER ONE

ConsolidatedmanagementreportYear in review 03

Consolidated financials 05

Risk factors 06

Social responsibility 08

Environmental responsibility 08

Dividends 10

Purchases by the company of its own shares 10

Group organization 11

Market share and competition 12

Post-closing events 12

2009 outlook 12

1.YEAR IN REVIEW

1.1The selective distribution marketThe French spent less on perfumes and cosmetics in 2008: sales of perfume products and cosmetics by specialized traditional outlets, independent shopsand major stores in France rose 2.5% to €6.56billion, less than in 2007 (+4%) and 2006 (+5%).Growth in volumes remained flat (0% to +1%) and in large part price-driven. Growth of 1.5% isforecasted in 2009 in value terms on the assumptionof a macroeconomic recovery in the second half.Price increases should be limited in response togreater price consciousness of consumers. Source: Precepta

In the United States, the total U.S. beauty industrydeclined 3.3% in dollar sales to US$8.4 billion. The steepest decline was registered by fragrances (-6%), with make-up also contracting while skincare,boosted by the anti-aging segment, remained steady.In the mass-market channel in the US perfumes alsocontracted while make-up and skincare managed to grow. The slowdown reflects both a contraction in the number of users but also in frequency of use.The study also indicated that the United States wasthe market most affected by the downturn. In contrast, Italy declines only 0.5% while sales in China registered strong growth of 17.2%. Source: NPD Group

1.22008 milestones2008 first quarterLaunch of The Beat line of Burberry

The worldwide launch of the new women’s fragranceline, Burberry The Beat, was a high point of the firstquarter, with very rapid product turnover and initialorder renewals at points-of-sale.

JuneCreation of a new subsidiary

On June 16, 2008, Inter Parfums created a newwholly-owned subsidiary in Switzerland. At the sametime, Inter Parfums contributed its proprietaryLanvin trademarks and brands to this new entity. An exclusive license agreement was concludedbetween Inter Parfums Suisse and Inter Parfumseffective July 1, 2008.

JuneBonus share issue

On June 18, 2008, the company proceeded with abonus issue on the basis of one new share for everyten shares held.

JulyExtension of the Paul Smith license agreement

In December 1998, Paul Smith and Inter Parfumssigned a 12-year agreement to create and produceperfumes and cosmetics under the Paul Smith brandand distribute them worldwide. In July 2008 thisagreement was extended for an additional seven yearsthrough December 31, 2017 on the basis ofcomparable terms and conditions.

JulyLaunch of the Jeanne Lanvin line of Lanvin

To render homage to the founder of France’s firstfashion house, Alber Elbaz reconciled modernity and femininity with a new fragrance, Jeanne Lanvin,both poetic and elegant, launched in July 2008.

SeptemberSignature of an agreement with Rafael Nadal for Lanvin

On September 30, 2008, Inter Parfums and RafaelNadal signed a major international agreement to promote the development of Lanvin fragrances.The world’s number one tennis player will becomethe standard-bearer for the Lanvin L’Homme Sportline to be launched in the summer of 2009.

3Two thousand eight registration document Inter Parfums. Consolidated management report

SeptemberLaunch of the Féerie line of Van Cleef & Arpels

Entirely inspired from the magical universe of Van Cleef & Arpels, the Féerie line, launched inSeptember confirms with brilliance its manifestconnection with the fine jeweler. The same poetry,imaginary world, and exclusive luxury. A pure objectof desire, Féérie, launched in September 2008,conjuring up a spectacular universe illuminated by stars, fairy wings and enchanted dreams.

OctoberMerger by absorption of Nickel

On October 1, 2008, Nickel became a wholly-ownedsubsidiary of Inter Parfums through a simplified merger

procedure involving the transfer of its assets and liabilitiesto the latter (transmission universelle de patrimoine).

2008 represented a significant advance in the Group’sdevelopment with major launches that included BurberryThe Beat, Jeanne Lanvin and Féerie.

1.3Operating highlights and key figures

For another year, growth targets were met in 2008:annual sales totaled €264.9 million, up 9.4% at current exchange rates over 2007 and 14.2% at constant exchange rates in a period marked by a strong rise in the euro.


1.4Sales by brand

In € millions 2004 2005 2006 2007 2008And as % of sales

Burberry 118.8 131.3 143.3 152.9 169.075.5% 67.5% 66.3% 63.2% 63.8%

Lanvin 7.6 29.5 34.4 33.3 39.04.8% 15.1% 15.9% 13.8% 14.7%

Van Cleef & Arpels - - - 11.9 21.0- - - 4.9% 7.9%

Paul Smith 14.3 14.5 17.7 18.0 13.49.1% 7.5% 8.2% 7.4% 5.0%

S.T. Dupont 8.9 8.8 10.1 11.1 11.55.7% 4.5% 4.7% 4.6% 4.3%

Roxy - - - 6.6 7.4- - - 2.7% 2.8%

Nickel 1.7 3.1 4.1 3.3 2.71.1% 1.6% 1.9% 1.4% 1.1%

Other 6.1 7.2 6.6 5.0 0.93.8% 3.8% 3.0% 2.0% 0.4%

Total 157.4 194.4 216.2 242.1 264.9

In 2008, the Group successfully met its objectives ina volatile economic environment, achieving anotheryear of sustained growth with consolidated sales of€264.9 million, up 9.4% at current exchange ratesand 14.2% at constant exchange rates over 2007.

- Burberry fragrances continued to expand withannual sales of nearly €170 million, up 10.5% atcurrent exchange rates and 16.3% at constantexchange rates, driven by the successful worldwidelaunch of the new women’s fragrance BurberryThe Beat and the strength of the brand’s existing lines;

- With sales advancing 17% to €39 million, Lanvinfragrances significantly exceeded the year’s initialtargets through steady performances by the Éclatd’Arpège line in the second half and the launches ofthe Rumeur 2 Rose line in the spring and the JeanneLanvin line in the fall;

- Van Cleef & Arpels fragrances also achievedexcellent results with sales of €21 million, up 77%over 2007 in response to the solid performances bythe First line and the successful launch of the newwomen’s fragrance line, Féerie.

1.5Sales by region

In € millions and % 2007 2008

North America 48.9 49.6South America 15.3 17.8Asia 31.6 33.9Eastern Europe 20.5 26.3Western Europe 83.3 85.3Middle East 18.6 24.2France 21.9 25.6Other 2.1 2.2

Total 242.2 264.9

- In a contracting market, launches of the Burberry The Beat, Jeanne Lanvin and Féerie lines contributed to good performances in France (+17%);- Western Europe (excluding France) remained stable in light of the challenging conditions in the UK and Spain;- The Middle East and Eastern Europe grew 30% and 28% respectively;- North America grew 11% in volume (2% in value in light of the US dollar’s weakness) despite the severity of the economic downturn in this region.

2.CONSOLIDATED FINANCIALS

2.1Income statement highlights

In € thousands 2005 2006 2007 2008

Sales 194,442 216,235 242,123 264,864% international 92% 92% 91% 90%

Income from operations 25,913 29,182 31,812 34,259% of sales 13.3% 13.5% 13.1% 12.9%

Net income 16,295 18,694 20,193 21,119% of sales 8.4% 8.6% 8.3% 8.0%

The gross margin as a percentage of sales (57.6% in 2008) remains high despite adverse foreign exchange trendsand provisions for Roxy inventory write-downs.

In line with our medium-term development strategy, the Group pursued marketing and advertising spending(+5%) while successfully maintaining tight control of all expenses: operating profit for 2008 expanded nearly8% compared to 2007 resulting in an operating margin approaching 13%.

Growth in net income was limited by two factors:

- increased financial expenses in connection with the acquisition of Lanvin trademarks;- the fair value recognition of financial instruments (US dollar hedges for 2009 and interest rate swaps on bankdebt) for a total of €1.2 million before tax.

2.2Balance sheet highlights

In € millions 2007 2008

Non-current assets 72.7 69.8Inventories 56.3 70.8Trade receivables 75.6 80.0Net cash 56.1 26.3Shareholders’ equity 134.2 155.9Borrowings 40.5 30.0Trade payables 65.2 52.9


The Group continues to have a very solid financialposition with shareholders’ equity of €155 millionand limited net financial debt of €4 million atDecember 31, 2008.

The decline in cash reflects primarily an intentionalpolicy to maintain high inventory levels making itpossible to fill virtually all orders received.

2.3Cash flow statement highlightsKey changes in consolidated cash flows:

- cash flow highlights from operating activitiesreflecting a proactive policy of increasing inventoriesand a decline in trade payables from reduced purchasesof components in the last quarter of the year;- cash flows from investing activities that included in the period no major capital expenditures otherthan those relating to normal operating activities;- cash flows from financing activities including the repayment of loans obtained in connection withthe acquisition of the Lanvin trademarks and the Van Cleef & Arpels license as well as the paymentdividend for fiscal 2007.

Pursuant to the above, net cash at December 31, 2008totaled €26 million.

3.RISK FACTORS

3.1Operating risksLicense agreements

The licensing system which is typical in the perfumeand cosmetics industry consists of a brand namecompany (Burberry, Paul Smith, etc.) granting the licensee (Inter Parfums) a right to use the brandname in exchange for royalty payments typicallyindexed to sales. The associated risk pertains to thepotential non-renewal of agreements upon expiration.

In the case of Inter Parfums, several factors tend to limitor eliminate this risk:

- length of contracts (10 years or more);- possibility of early renewal;- diversified portfolio of licensed brands;- factors specific to the company (sophisticatedmarketing, distribution network, corporateorganization, etc.);- limited number of potential licensees with a similarprofile.

Market conditions

The creation and distribution of prestige perfumes is a highly competitive sector. The positioning ofcompanies in the market depends on several factorsincluding notably historical expertise, the quality ofthe products created and the distribution network.

Insurance

Inter Parfums has always carried adequate insurancefor its activities worldwide under conditions thatcomply with industry standards, providing globalcoverage for important risks and activities.

This coverage includes:

- property damage and business interruption;- inventory loss or damage;- contingent use and occupancy insurance;- civil liability;- directors’ and officers’ liability;- product liability;- transport;- professional travel and automobile insurance;- IT equipment loss or damages;- specific coverage for particular events.

Inter Parfums purchases supplemental insurancewhen required, either in compliance with the law or more specifically to cover business risks or risksarising from specific circumstances.

Insurance coverage is overseen by a specialized brokerand spread among four major European insurers.

To the best of the company’s knowledge, all risks areinsured. None of risks mentioned above are self-insured.

3.2International business risksCurrency risks

A significant portion of the company’s sales is in currencies other than the euro. In consequence,the company incurs risks related to exchange ratefluctuations for these currencies, notably the USdollar (33.6% of sales) and a lesser extent the poundsterling (8.0% of sales) and the Japanese yen (2.2%of sales).

The primary objective of the company’s foreignpolicy seeks is to hedge the most probable budgetexposure related primarily to cash flows fromoperating activities in US dollars as well as tradereceivables in the US dollar, pound sterling andJapanese yen. To this purpose, the company hasrecourse to forward sale agreements according to procedures that prohibit any transactions ofspeculative nature.

Financial instruments used by the Group to manageits foreign exchange exposure are described in note3.14.3 of the consolidated financial statements.

Country risks

With sales in more than 100 markets, Inter Parfumsregularly reassesses country risks.

For the past few years, the company has incurred no significant default on payments in countriesconsidered at risk.

Given our collections policies, receivables monitoring and the quality of our distributors’financial health, no country risk reserve allocationswere made in the financial statements for the yearended December 31, 2008.


3.3Employee-related risksIn light of the company’s organizational structure,the role of personnel is decisive. To foster personnelretention and increase the level of expertise andservice provided to customers, the company hasdeveloped a strong corporate culture andimplemented a system of employee management nd motivation based on a combination of toolsincluding variable compensation, employee profit-sharing, stock options available to allpersonnel, annual review meetings, continuingeducation, etc.

The company’s rate of employee turnover andabsenteeism is very low (refer to the chapter “socialresponsibility” of this document).

3.4Trade and financial risksCustomer risks

Trade receivable collection risks are managed fromthe inception of the receivable by maintaining a goodknowledge of the company’s market and customerbase and limiting the volume of orders for newcustomers. In addition, this risk is further reduced by a diversified customer base with 100 customersaccounting for 80% of sales. Balances of outstandingtrade receivables are monitored daily, and collectionprocedures are immediately implemented. The rate of default of trade receivables is 0%.

Risks of default

The risk of not meeting its financial commitments for the company is extremely low given the ratio ofnon-current debt to equity of 13% and significant netcash resources representing 10% of total balance sheet.

Interest-rate risks on loans are covered by interest-rateswaps.

Financial instruments by the Group to manage itsinterest rate risk described in note 3.14.1 of theconsolidated financial statements.

Liquidity risk

A prudent management of liquidity risk impliesmaintaining a sufficient level of liquidity and the availability of financial resources through the appropriate types of credit lines. Maturities forfinancial assets and liabilities are presented in note3.14.2 of the consolidated financial statements.

Equity risk

Treasury shares are held exclusively in connection withthe liquidity agreement managed by a brokerage firm.They are recorded in the consolidated financialstatements at acquisition cost as a charge under equity.

The portfolio of marketable securities includesprimarily money market funds that do not includean equity component. The Group does not usehedging instruments to cover these positions.

Valuation risks

A significant share of the company’s assets consists of intangible assets and goodwill whose value depends in large part on future operating performances. Thevaluation of intangible assets and goodwill also impliesrecourse to objective judgments and complex estimatesconcerning items uncertain by nature. If a change occursin the underlying assumptions on which this valuation is based, a reduction in the value of shareholders’ equitywill be recorded. The impact of such adjustment wouldhowever be extremely limited.

Risk associated with inadequate internal controls

Effective procedures applied by all Group companiesand in all areas of financial risks identified arereassessed annually in compliance with the FinancialSecurity Act (Loi de Sécurité Financière).

These internal controls are reinforced in France by the application of the Sarbanes Oxley act withinthe framework of the regulatory obligations of Inter Parfums Inc. (parent company of Inter ParfumsSA) and its listing on NASDAQ (see the chapter on“internal control” of this registration document).

Information technology risks

Inter Parfums and its subsidiaries have an ERPapplication providing integrated sales, productionand accounting management capabilities. Thissystem makes it possible to monitor information inreal-time and reduce the risk of data loss and errorsfrom multiple entries.

The company’s computer system is subject to risks of breakdown, electrical power outages, computerviruses and data theft. To reduce these risks, thecompany has robust security systems that includepower converters, firewalls, antivirus programs, etc.

Litigation and other risks

There is currently an arbitration proceeding betweenInter Parfums and one of its distributors relating to commercial conditions. A provision has beenrecorded for this risk based on estimates and the bestassessment of its potential financial impact.

The company has had no knowledge in the lasttwelve months of other governmental, judicial orarbitration proceedings that could have a materialimpact on the Group’s activity, assets and liabilities,financial position or earnings.


4.SOCIAL RESPONSIBILITY

Over the years, Inter Parfums has developed acorporate culture built around creativity, teamwork.

Inter Parfums management and employees sharestrong values in respect to working conditions, equalopportunity employment and anti-discriminationmeasures, respect, and employee training. These valuesthat today represent the foundations for sustainablegrowth reflect the contribution of the cultural diversityand rich experience of our workforce.

2006 2007 2008

Total workforce 128 145 152Executives and management 68 77 82Supervisory staff - - 9Non-management staff 60 68 61Average age (years) 36 36 37 Average seniority (years) 6 6 6

In the year under review the number of personnelincreased 5%.

4.1Workforce by departmentNumber of employees as of 12/31/07 12/31/08

Executive management 2 2Production & Logistics 22 22Burberry Fragrances 25 27Luxe & Fashion 22 25France 51 49Finance & Corporate affairs 23 27Total 145 152

4.2Wages and benefitsIn € thousands 2007 2008

Total wages and benefits of which Management Committee 14,959 15,946Members - wages, bonuses & social charges 2,488 2,923Of which Management Committee membersshare based payment expenses 213 208

In addition, supplemental retirement benefits forexecutive management of €109,000 million werepaid in 2008.

4.3Employee representationAs required by law, elections are held every four years to select a works’ committee and employeerepresentatives. The last elections, held in early 2007,did not elect either a workers’ committee oremployee representatives.

4.4The workweek organizationAll employees of the company work on the basis of a 35-hour workweek according to a set number of 218 work days per year and are entitled to 9 daysof reduced working hours benefits (RTT) per year.The rate of absenteeism in 2008 was 4.9% (2.7% in 2007), due primarily to maternity leaves.

4.5Employee compensation and benefitsInter Parfums has a compensation policy, a system of job classifications and performance evaluationsuniformly applied to all employees. These proceduresguarantee equal treatment of men and womenemployees and ensure the general cohesion of personnel.Employees of the company and its subsidiaries alsobenefit from variable incentive compensation benefitslinked to the Group’s performance.

Inter Parfums also promotes employee stock ownershipthrough annual stock option plans available to allemployees.

4.6Statutory employee profit-sharingIn accordance with applicable legislation, an employeeprofit-sharing agreement was implemented onDecember 20, 2001. The amount paid for 2008 was€1 million (compared to €1.2 million in 2007).

4.7Promoting the acquisition of new skillsAll Inter Parfums employees are offered training todevelop technical, management or personal skills.

Inter Parfums has also undertaken measures to ensurethat eligible employees are fully informed of their rightsto individual training benefits under French law (DroitIndividuel à la Formation).

5.ENVIRONMENTAL RESPONSIBILITY

Inter Parfums’ business focuses principally on the creation and distribution of products. For thisreason, the entire production process is outsourced to manufacturing partners. These include producersof juice, glass, caps and cardboard boxes andpackaging companies. With no production activitiesof its own, Inter Parfums does not own laboratoriesor manufacturing sites.

Even though it operates in a sector less pollutingthan other industries, Inter Parfums is committed to preserving the environment and quality of life. For this reason, it remains involved in the productionprocess and coordinates with all subcontractors andsuppliers who manufacture its products, intervening


at every stage in the product lifecycle, and in thisway, vectors for promoting its commitment to theenvironment.

5.1Low energy requirementsInter Parfums’ consumption of water and energy islimited to normal office usage for the administrativepremises of its headquarters that house 111 employees.Other water and energy consumption concern thesales offices and commercial teams in the field thatrepresent 41 employees out of 152.

5.2RecyclingThe company constantly strives to reduce the alreadylow impact of its business on the environment by investing in the treatment and recycling of thepackages, cardboard boxes and glass left once itscustomers have finished using its products. With this objective, through its participation in the “Eco Emballage” packaging recycling program, Inter Parfums contributes to waste management and recycling.

5.3The minimization of environmental impactTo balance product quality and aesthetics withenvironmental considerations, Inter Parfums takescare to reduce packaging volumes at the source andselect the appropriate materials at each stage ofproduction to ensure optimal conditions for theirrecycling or disposal. Accordingly, Inter Parfumsselects partners using cutting-edge design techniquesfor bottles and boxes, with a commitment to reducethe impact of manufacturing processes on theenvironment.

The bottles of its products are made of recyclableglass and the production process provides for asystem of recuperation, grinding and recasting ofcertain bottle components, which generates savingsin volume of materials used of 20%. A biodegradablewater-soluble solution that does not harm theenvironment is used in the coloring of some of itsbottles. The process of coating used for certainproducts is compliant with the law of 2005 destinedto reduce emissions of volatile organic compounds(VOC) in the air by the use of “hydro coating”. This commitment to environmental responsibility is also a criteria in selecting subcontractors.

5.4A commitment to well-beingEven though Inter Parfums does not manufacture its products itself, it nevertheless ensures theirintroduction on the market. As such it ensurescompliance with international and European

regulations concerning the design and production of all products it distributes and is responsible for ensuring the safety for human use of cosmeticproducts it distributes. To this purpose, it conductstests that that include ensuring innocuous nature for the skin and eyes. In compliance with theEuropean Cosmetics Directive, its products are notsubject to any tests on animals. Tests for skinirritation are conducted on healthy voluntary adultsubjects and ocular irritantancy testing through cell cultures.

Inter Parfums has taken measures for the applicationof the new European Community Regulation onchemicals and their safe use concerning theRegistration, Evaluation, Authorization andRestriction of Chemical substances (EC Directive1907/2006 of December 18, 2006) or REACH withits suppliers. All technical and organizationalmeasures to be applied following the adoption ofREACH have been implemented by the company.

The pre-registration phase of REACH ended onDecember 1, 2008. During this period, importersand manufacturers of “phase-in” substances wererequired to register the substances once volumeexceeds one ton per year. Pre-registration makes itpossible to obtain additional delays in connectionwith the registration procedure.

Inter Parfums, as a downstream user of chemicalsubstances, is not subject to the registrationrequirement. However, it has sought to maintain anactive role by ensuring that the registration processproceeds effectively and that there exists a continuoussupply for the sourcing chemical substancescontained in its products.

Inter Parfums took the initiative to contact itsdifferent subcontractors to ensure they and thosefurther down in the supply chain effectively complywith registration, notification or authorizationrequest procedures. Inter Parfums has asked all itssuppliers to provide commitments that that they willnot supply articles containing substances listed inappendix XIV (Substances of Very High Concern).To date, no supplier has declared the presence inarticles provided to Inter Parfums of substances thatare candidates for authorization.

Information relating to REACH including notablyrisk management measures transmitted throughsecurity data files will be taken into account by Inter Parfums or its suppliers as they are issued.

For information, the deadlines for theimplementation of REACH are spread over theperiod from June 1, 2008 to June 1, 2018.

Inter Parfums’ actions in this area exceed that of asimple coordinator by increasing its partners’awareness of environmental issues and stayinginformed of the business practices of itssubcontractors and suppliers, highlighting itscommitment to environmental responsibility.


6.DIVIDENDS

Since 1998, the company has adopted a policy of distributing dividends that today represents approximately25% of consolidated earnings, destined to reward shareholders while at the same time associating them withthe Group’s expansion. In early May 2008, a dividend of €0.38 per share was paid or €4.6 million.

Five years summary of dividends

2004 2005 2006 2007 2008

Dividend per share (1) €0.25 €0.28 €0.31 €0.35 €0.38Annual change (1) +26% +10% +15% +11% +9%Average number of shares (2) 5,174,465 8,974,298 10,421,965 11,480,164 12,719,676

(1) Adjusted for bonus issues. (2) Excluding treasury shares.

7.PURCHASES BY THE COMPANY OF ITS OWN SHARES

In compliance with article 241-1 et seq. of the AMF General Regulation, the following paragraph describes the share repurchase program that will be submitted to be submitted for authorization to the shareholders’meeting of April 24, 2009.

7.1Summary of the previous share repurchase programIn connection with the authorization granted by the shareholders’ meeting of April 25, 2008 and implemented by decision of the Board of Directors’ meeting of May 21, 2008, from April 25, 2008 to February 28, 2009 Inter Parfums proceeded with the following transactions:

Situation at February 28, 2009

Percentage of own shares directly and indirectly held 0.36% of the capitalNumber of shares canceled in the last 24 months None

Number of treasury shares 47,466 sharesCarrying value of treasury shares €895,335 Market value of treasury shares €709,617

Accumulated Positions open on gross changes the document filing date

Purchases Sales Call options Forward Call Forward purchase purchases options sales

Number of shares 101,966 78,681Maximum maturity None None None NoneAverage price of the transaction 20,44 21,32Exercise price None None None None

The company has not had recourse Amounts 2,084,185 1,677,799 to financial derivative instruments


Shares purchased and sold have been allocatedexclusively for the purpose of market-making activity assured by an investment service provider in connection with a liquidity agreement and incompliance with the conduct of business rules of theFrench association of investment firms (AFEI). Noother uses were made and no shares were canceled.None of the other uses of this authorization grantedby the shareholders meeting of April 25, 2008 wereimplemented.

For the duration of this authorization, no shares werecanceled and no financial derivatives were used inconnection with its implementation.

7.2Purpose of the new share repurchase authorizationThe shareholders meeting of April 24, 2009 is calledto renew through its ninth resolution, theauthorization granted to the Board of Directors topurchase and sell shares of the company for thefollowing purposes:

- maintain an orderly market in the company’s sharesthrough an investment services provider within theframework of a liquidity agreement in compliance

with the conduct of business rules of the Frenchassociation of investment firms (AFEI);

- grant employees or officers of the company and/orthe Group stock options in accordance with theprovisions of articles L.225-177 et seq. of the FrenchCommercial Code and/or bonus shares in accordancewith articles L.225-197-1 et seq. of the FrenchCommercial Code;

- remittance of shares pursuant to the exercise of rights attached to securities conferring rights by redemption, conversion, exchange, presentation of warrants or any other means to grants of thecompany’s shares;

- use such shares for payment or exchange inconnection with financial transactions or acquisitionsin compliance with the financial market regulations;

- cancel shares to increase the return on equity andearnings per share and/or eliminate the impact ofdilution for shareholders from capital increases subjectto adoption of the seventeenth resolution of thisextraordinary general meeting set forth below;

- permit the company to buy and sell its own shares forany other authorized purpose or practice admitted bythe market or which may be subsequently authorizedor admitted by applicable laws and regulations.

7.3 Maximum percentage of capitalMaximum purchase priceExtract of the ninth resolution submitted for approvalby the shareholders meeting of April 24, 2009:

Shares acquired shall be subject to the following limits:

- the maximum purchase price is €45 per share and the minimum sale price €10 per share, excludingexecution costs;

- the total number of shares acquired may not exceed5% of the capital stock outstanding on the date of this meeting. This 5% limit applies to an amount of capital that will be adjusted as applicable forcorporate actions affecting the capital stock after thismeeting, whereby acquisitions by the company shallunder no circumstances increase its holding, directly and indirectly through indirect subsidiaries, to morethan 5% of the capital stock;

- pursuant to the above, by way of indication andwithout taking into account shares already held by thecompany, 13,351,605 shares on December 31, 2008would represent 5% of the capital stock corresponding toa maximum theoretical purchase price of €30,041,100.

7.4Duration of the sharerepurchase programIn compliance with the provisions of the ninth resolutionto be submitted to the shareholders meeting of April 24,2009, the authorization to implement this sharerepurchase program is granted for 18 months from thedate of this meeting or no later than October 24, 2010.

If one of the characteristics of the description of thisprogram is modified during the period of its duration,the public shall be notified of this modification inaccordance with the provisions set forth in article.L.212-13 of the AMF General Regulation.

8.GROUP ORGANIZATION

The ownership structure of Inter Parfums Inc. brokedown as follows at December 31, 2008:

- Philippe Benacin and Jean Madar: 51.50%;- Free float: 48.50%.


INTER PARFUMSSRL

Italy

PHILIPPE BENACINJEAN MADAR

INTER PARFUMS INC.Nasdaq - New York

INTER PARFUMSLTD

United Kingdom

INTER PARFUMS SAEuronext - Paris

FREE FLOAT

FREE FLOAT

52%

75%

51%

INTER PARFUMSSUISSESARL

Switzerland

100%

INTER PARFUMSDEUTSCHLAND

GMBHGermany

51%

INTER ESPANAPARFUMS &

COSMÉTIQUE SLSpain

51% 51%

25%

48%

9.MARKET SHARE AND COMPETITION

Market share

In France, Inter Parfums attained roughly a 2% shareof the selective distribution market of prestigeperfumes. In certain countries such as the UnitedStates, the United Kingdom, Russia or China, thecompany estimates its market share of total Frenchperfume imports at between 1% and 4%.Source: Internal estimates

Competition

In an industry highly concentrated around major playerswith billions of euros in sales, Inter Parfums pursues aunique strategy of steadily and methodically developinga portfolio of perfumes for selective distribution basedon internationally renowned brands.

Although Inter Parfums’ closest competitors do notdevelop mass market or cosmetics products, several largecorporations have perfume divisions with comparablestrategies.

10.POST-CLOSING EVENTS

None.

11.2009 OUTLOOK

Philippe Benacin, Chairman and Chief ExecutiveOfficer, noted: “We met sales and earnings objectivesfor 2008 despite the challenging economic conditions ofthe second half. Information on the market received inthe beginning of 2009 is relatively mixed. Nevertheless,despite reduced visibility, based on satisfactory sales forthe first quarter, we have not modified annual salestargets of €273 million for 2009. In addition, we willcontinue to pursue opportunities for external growth inan environment now more favorable for acquisitions”.

Philippe Santi, Executive Vice President, added:“Given the current economic and foreign exchangeenvironment, Inter Parfums delivered good financialperformances with among the best margins of the sector.The quality of our business model contributed to a highoperating margin of nearly 13% in 2008. The flexibilityof this model, the quality of our brand portfolio and ourbalanced geographical sales mix should permit us tomaintain profitability at satisfactory levels in 2009”.


14 Two thousand eight registration document Inter Parfums. Consolidated financials

CHAPTER TWO

ConsolidatedfinancialsConsolidated financial statements 15

Significant accounting policies 20

Basis of presentation 24

Notes to the balance sheet 25

Note to the income statement 35

Segment reporting 37

Other information 38

Consolidated income statement

In € thousands, except per share data which is in units Notes 2007 2008

Sales 4.1 242,123 264,864

Cost of sales 4.2 (94,694) (112,308)

Gross margin 147,429 152,556

% of sales 60.9% 57.6%

Selling expenses 4.3 (106,728) (110,007)Administrative expenses 4.4 (8,067) (7,724)

Income from current operations 32,634 34,825

% of sales 13.5% 13.1%

Other operating income and expenses 4.5 (822) (566)

Income from operations 31,812 34,259

% of sales 13.1% 12.9%

Interest income 1,682 1,246Interest and similar expenses (2,356) (2,891)

Net finance costs (674) (1,645)

Other financial income and expenses (162) (1,107)

Net financial expense 4.6 (836) (2,752)

Income before income tax 30,976 31,507

% of sales 12.8% 11.9%

Income tax 4.7 (11,158) (10,924)Effective tax rate 36.0% 34.7%

Net income 19,818 20,583

% of sales 8.2% 7.8%

Minority interests (375) (536)

Net income 20,193 21,119

% of sales 8.3% 8.0%

Basic earnings per share (1) 4.8 1.76 1.66Fully diluted earnings per share (1) 4.8 1.73 1.65

(1) Not restated for bonuses issues.

15Two thousand eight registration document Inter Parfums. Consolidated financials

Consolidated balance sheet

Assets

In € thousands Notes 2007 2008

Non-current assets

Net trademarks and other intangible assets 3.1 61,911 59,557Goodwill 3.2 4,380 3,814Net property, plant, equipment 3.3 3,368 4,162Investments and other non-current assets 306 408Non current financial securities 234 70Deferred tax assets 3.11 2,482 1,743

Total non-current assets 72,681 69,754

Current assets

Inventories and work in progress 3.4 56,346 70,794Trade receivables and related accounts 3.5 75,610 80,054Current income tax assets - 969Other receivables 3.6 6,491 10,113Cash and cash equivalents 3.7 60,416 30,380

Total current assets 198,863 192,310

Total assets 271,544 262,064


Shareholders’ equity and liabilities

In € thousands Notes 2007 2008

Shareholders’ equity

Common stock 36,301 40,176Additional paid-in capital 1,046 265Retained earnings 76,693 94,368Net income for the year 20,193 21,119

Total group shareholders’ equity 134,233 155,928


Total shareholders’ equity 3.8 133,891 155,762

Non-current liabilities

Provisions for non-current commitments 3.9 546 712Non-current borrowings 3.10 29,439 19,803Other non-current debt - -Deferred tax liabilities 3.11 1,734 3,636

Total non-current liabilities 31,719 24,151

Current liabilities

Trade payables and related accounts 65,195 52,866Current borrowings 3.10 11,094 10,271Commitments and contingencies 3.9 2,280 2,280Current income tax liabilities 1,981 309Short-term bank loans 3.10 4,303 4,076Other liabilities 3.12 21,081 12,349

Total current liabilities 105,934 82,151

Total shareholders’ equity and liabilities 271,544 262,064


Statement of changes in Shareholders’ equity

In € thousands Number Capital Paid-in Retained Total equityof shares stock capital earnings Group Minority Total

& net share Interestsincome

As of December 31, 2006 (1) 10,872,580 32,643 1,545 81,607 115,795 115,795

Bonus issue 1,097,541 3,293 (2,234) (1,059) - - -Shares issued on exercise of stock options 121,746 365 1,735 - 2,100 - 2,1002007 group net income - - - 20,193 20,193 (375) 19,8182006 dividend paid in 2007 - - - (4,162) (4,162) - (4,162)Treasury shares (4,120) - - (82) (82) - (82)Stock-based compensation - - - 419 419 - 419Remeasurement of financial instruments at fair value - - - (43) (43) - (43)Changes in consolidation scope - - - - - 29 29Other changes - - - 13 13 4 17

As of December 31, 2007 (1) 12,087,747 36,301 1,046 96,886 134,233 (342) 133,891

Bonus issue 1,214,545 3,644 (1,671) (1,973) - - -Shares issued on exercise of stock options 77,068 231 890 - 1,121 - 1,1212008 group net income - - - 21,119 21,119 (536) 20,5832007 dividend paid in 2008 - - - (4,580) (4,580) - (4,580)Treasury shares (27,755) - - (485) (485) - (485)Stock-based compensation - - - 298 298 - 298Remeasurement of financial instruments at fair value - - - 4,135 4,135 - 4,135Changes in consolidation scope - - - - - 701 701Other changes - - - 87 87 11 98

As of December 31, 2008 (1) 13,351,605 40,176 265 115,487 155,928 (166) 155,762

(1) Excluding treasury shares.


Statement of cash flows


Cash flows from operating activitiesNet income 19,818 20,583Depreciation, amortization and other 1,796 4,697Capital (gains) losses on asset disposals (5) 164Net finance costs (674) (1,645)Tax charge of the period 11,158 10,924

Operating cash flows 32,093 34,723

Interest expense (2,418) (2,343)Tax payments (11,199) (13,186)

Cash flow after interest expense and tax 18,476 19,194

Change in inventories and work in progress (16,047) (14,979)Change in trade receivables and related accounts 6,585 (4,799)Changes in other receivables (493) 2,244Change in trade payables and related accounts 18,011 (12,329)Change in other current liabilities (1,921) (1,582)

Change in working capital needs 6,135 (31,445)

Net cash provided by (used in) operating activities 24,611 (12,251)

Cash flows from investing activities

Acquisition of intangible assets (39,071) (782)Acquisition of property, plants and equipment (251) (2,120)Changes in the scope of consolidation (3,549) 701Changes in investments and other non-current assets 13 (231)Sales of fixed assets - -

Net cash flows provided by (used in) investing activities (42,858) (2,432)

Cash flows from financing activities

Issuance of borrowings and new financial debt 40,000 -Debt repayments (7,600) (11,100)Dividends paid (4,163) (4,580)Capital increases 2,101 1,121Treasury shares (82) (564)Other 32 (3)

Net cash flows from financing activities 30,288 (15,126)

Change in net cash 12,041 (29,809)

Cash and cash equivalents - beginning of year 44,072 56,113

Cash and cash equivalents - end of year 56,113 26,304

The reconciliation of net cash breaks down as follows:


Cash and cash equivalents 60,416 30,380Short-term bank loans (4,303) (4,076)

Net cash at the end of the period 56,113 26,304


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.SIGNIFICANT ACCOUNTING POLICIES

1.1Compliance statementIn accordance with EC regulations 1606/2002 ofJuly 19, 2002 on international accounting standards,the 2008 consolidated financial statements of theInter Parfums Group are established in compliancewith IAS/IFRS (International AccountingStandards/International Financial ReportingStandards) applicable since 2005 as endorsed bythe European Union. These standards have beenconsistently applied over the periods presented.

Financial information presented herein has beenbased on:

- IFRS standards and interpretations whoseapplication was mandatory starting in 2005;

- Options retained and exemptions used by theGroup for the preparation of IFRS consolidatedfinancial statements.

The consolidated financial statements of December 31, 2007 were approved by the Board of Directors on March 3, 2009. They will bedefinitive when approved by the ordinary generalmeeting of April 24, 2009.

1.2Changes in accounting standards

The following standards, amendments andinterpretations that entered into force on January 1,2008 have been applied by the company in preparingits consolidated financial statements:

- Amendment to IFRS 7 and IAS 39 “reclassificationof financial assets”.

The following standards, amendments andinterpretations will not be applied in the consolidatedfinancial statements until January 1, 2009:

- IFRS 8 “Operating segments”;- Amendment to IAS 1 “Presentation of financialstatements”;- Amendment to IAS 23 “Borrowing costs”;- Amendment to IFRS 2 “Vesting conditions andcancellations”;- Amendments to IFRS 1 and IAS 27 “Cost of aninvestment in a subsidiary, jointly controlled entityor associate”;- Amendments to IFRS 1 “First-time adoption ofIFRS - revision of the structure of the standard”.

The following standards, amendments andinterpretations will be applied in the consolidatedfinancial statements starting July 1, 2009:

- IFRS 3 and IAS 27 (revised) “Businesscombinations”;- Amendment to IAS 39 “Financial instruments:recognition and measurement - eligible hedged items”.

The impact of these standards on financialstatements that is currently being assessed is notexpected to have a material effect on the company’sconsolidated financial statements.

Because of the company’s business, the followingstandards, amendments and interpretations will notbe applied to the consolidated financial statements:

- Amendments IAS 32 and IAS 1 “Puttableinstruments”;-IFRIC 12 “Service concessions”;-IFRIC 13 “Customer loyalty programs”;- IFRIC 14 and IAS 19 “The limit on a definedbenefit asset, minimum funding requirements andtheir interaction”;- IFRIC 15 “Agreements for the construction of realestate”;- IFRIC 16 “Hedges of a net investment”;- IFRIC 17 “Distribution of non-cash assets toowners”;- IFRIC 18 “Transfers of assets from customers”.

1.3First-time adoption of IFRSFor the first time adoption of IFRS for the financialstatements prepared on December 31, 2005 with a transition date of January 1, 2004, Inter Parfumschose to apply the following exemptions forstandards applicable to the company:

- fixed assets: the Group has chosen to continue to recognize property, plant and equipment at historical cost;

- share-based payments and equivalents: for programsinvolving equity-settled share-based payment, the Group has elected to apply IFRS 2 for grantsafter November 7, 2002 and not vested beforeJanuary 1, 2005.

1.4Basis of consolidationOn January 1, 2007, Inter Parfums SA set up newdistribution subsidiaries in four major Europeanmarkets (Italy, Germany, Spain, United Kingdom).These subsidiaries are 51%-owned by Inter Parfumsand 49%-owned by local distributors. Because Inter Parfums consequently exercises exclusive controlover these companies they are fully consolidated.

In the second quarter, Inter Parfums acquired the remaining stake of Nickel held by minorityshareholders (cf. note 2.3). As a result, Nickel is nowa wholly-owned subsidiary. In effect, minorityshareholders of Nickel and Inter Parfums benefitedfrom a bilateral promise to purchase or sell the


minority interests that may be exercised by either ofthe parties from January 1, 2007 to June 30, 2007.

On July 1, 2007, Inter Parfums Trademark and Inter Parfums Grand Public, wholly-ownedsubsidiaries of Inter Parfums, were wound up by thetransfer of their assets and liabilities (TransmissionUniverselle de Patrimoine) to the Group. This had no impact on the consolidated financial statements.

On June 16, 2008, Inter Parfums created a newwholly-owned subsidiary in Switzerland. At the sametime, Inter Parfums contributed its proprietaryLanvin trademarks and brands to this new entity. On July 1, 2008 and exclusive license agreement was concluded between Inter Parfums Suisse and Inter Parfums. This transaction has no impact on the financial statements included in this report.

On October 1, 2008, Nickel became a wholly-ownedsubsidiary of Inter Parfums through a simplifiedmerger procedure involving the transfer of its assets

and liabilities to the latter (Transmission Universelle dePatrimoine) that had no impact on the consolidatedfinancial statements.

As a result, all Group subsidiaries are fullyconsolidated. These include Inter ParfumsDeutschland GmbH, Inter España Parfums andCosmetiques S.L., Inter Parfums Srl, Inter ParfumsLtd and Inter Parfums Suisse Sarl.

Inter Parfums SA

Inter Parfums Suisse Sarl Switzerland 100%Inter Parfums Deutschland GmbH Germany 51%Inter España Parfums and Cosmetiques S.L. Spain 51%Inter Parfums Srl Italy 51%Inter Parfums Ltd United Kingdom 51%

The financial statements of subsidiaries have the same fiscal year as the parent company that runsfor 12 months ending on December 31.


1.5 Translation methodThe company’s operating currency and currency for the presentation of financial statements is the euro.

Transactions in foreign currencies are translated at the exchange rate in effect on the date of the transaction.Foreign currency denominated payables and receivables are translated at the exchange rate in effect as of December 31, 2008. Translation losses and gains arising from the conversion of accounts denominated in foreign currencies on December 31, 2008 are recorded in the income statement. Hedged transactions are translated at the negotiated exchange rate.

The main rates of exchange applied in relation to the euro are as follows:

Currency Closing exchange rate Average exchange rate2007 2008 2007 2008

US Dollar (USD) 1.4721 1.3917 1.3704 1.4707Pound sterling (GBP) 0.7334 0.9525 0.6843 0.7963Swiss franc (CHF) N/A 1.4850 N/A 1.5689

(1) Average annual exchange rate calculated starting from July 1, 2008, the date of the start of operations of the Swiss subsidiary.

1.6Use of estimates

The preparation of consolidated financial statementsrequires the use of estimates and assumptions for the valuation of certain balance sheet and incomestatement bounces. These concern primarily thevaluation of intangible assets, amounts to be set asidefor provisions for contingencies, provisions forinventory losses and expenses and deferred tax assets.Although these estimates are based on management’sbest knowledge of current events and situations, actualresults may ultimately differ from these estimates.

1.7Revenue recognition

Revenue includes principally wholesale sales todistributors and agents and direct sales to retailers for the part registered by Group subsidiaries.

Revenue from perfume and cosmetics products ispresented net of all forms of discounts and rebates.

Revenue is recognized on basis of conditions oftransfer to the buyer of the risks and rewards incidentto ownership to the buyer. Amounts invoiced at year-end when the actual transfer of title occurs inthe following year are not recognized under revenueof the year in progress.

1.8Trademarks and other intangible assetsTrademarks and other intangible fixed assets,including trademarks under licensing contracts andacquired trademarks are recorded at cost.

These trademarks that that constitute well-establishedlegally protected international brand names areclassified as indefinite life intangible assets and arenot amortized.

(1)

Finite life intangible assets such as upfront licensefees are amortized on a straight-line basis over theduration of the license.

Rights on glass molds are classified as finite lifeintangible assets and are amortized over a durationbetween three and five years.

Upfront license fees are remeasured at least once ayear or whenever there is an indication of impairmentof value in use defined as the present value ofestimated future cash flows expected to arise from the continuing use of these assets. Data usedoriginates from the annual and multiyear budgetsdrawn up by Management. The discount rate beforetax applied for remeasurement is the weightedaverage cost of capital (WACC) of 9.5% atDecember 31, 2008. A provision for impairment is recorded under income if this value is lower thanthe carrying value.

Proprietary brand names are remeasured at least oncea year on the basis of the present value of estimatedfuture cash flows to infinity generated by these assetsand fair value net of disposal costs determinedaccording the method of price-to-sales in reference to similar transactions.

The discount rate before tax applied for remeasurementis the weighted average cost of capital (WACC) of 9.5% at December 31, 2008 compared to 9.0% at December 31, 2007. This ratio is determined onthe basis of the long-term interest rate of 3.9%corresponding to the average rate for 10-year OATFrench fungible treasury bonds of the last quarter,the rate expected by an investor in this sector and thespecific risk premium for this sector. The growth rateto infinity adopted is 1.0% at December 31, 2008compared with 2% for the prior period. A provisionfor impairment is recorded under income if thisvalue is lower than the carrying value.

Under IAS 38.27b revised in 2004, costs generatedon acquisition analyzed as directly attributable costsare included in the cost of the acquired assets.

Other intangible assets are amortized over theiruseful lives and subject to impairment testing whenan indication of impairment exists.

1.9GoodwillGoodwill is defined as the difference between thepurchase price of shares of consolidated companiesand the Group’s share in restated net assets aftermeasurement of the fair value of assets and liabilitiesacquired.

Positive goodwill arising from the acquisition ofNickel has been recognized in the balance sheet.

This goodwill is tested annually or whenever thereexists an indication of potential impairment. It ismeasured at market price as determined according to the method of forecasted price-to-sales ratios in reference to similar transactions and the value in use determined according to the present value

of estimated future cash flows to infinity. Because the carrying value of Nickel exceeds the higher of the value in use or market value, an impairment was recorded for the difference (cf. note 3.2) and recognized in “Other operating income and expenses”.

1.10Property, plants and equipmentTangible fixed assets are valued at cost (purchaseprice plus related costs, excluding acquisition cost)and depreciated over their estimated useful lives on astraight-line basis (2 to 5 years). Tangible fixed assetsinclude molds for caps.

1.11Inventories and work in progressInventories are valued at the lower of cost orprobable resale value. A provision for impairment is recorded when their probable resale value is lowerthan the carrying value.

Inventories of raw materials and supplies are valuedon the basis of average weighted prices.

The cost of finished products includes the cost of materials used, production expenses and a share of indirect costs valued at a standard rate.

At the end of every year, these standard rates arecompared with the effective rate actually obtainedbased on actual data at year-end.

1.12Non-current financial assetsMarketable securities on initial recognition arerecorded at cost and subsequently remeasured at fairvalue corresponding to the market value at the end of each period.

All Group marketable securities have been classified as “available-for-sale financial assets” and presented in “Cash and cash equivalents”.

In accordance with IAS 39.55, gains and losses on “available-for-sale financial assets” are recorded at year-end in equity., However, in accordance with IAS 39.67, a significant or prolonged decline in fair value below the cost value of the securities, is recognized in profit or loss.

At December 31, 2008, losses relating to “assets heldfor sale” classified under “non-current financialassets” were recorded in the income statement.

1.13Accounts receivableAccount receivables are recorded at face value.A provision for impairment is recorded when the probable recovery value is deemed to be less than the carrying value.


1.14Deferred taxTiming differences between the tax base andconsolidated assets and liabilities and tax onrestatements on consolidation give rise to therecognition of deferred taxes under the liabilitymethod, taking the known year-end tax conditionsinto account.

Potential tax credits resulting from loss carryforwards are only recorded when their use in the short term is deemed likely, and subject todepreciation when appropriate, are maintained in the balance sheet. At December 31, 2008, alldeferred tax assets relating to potential tax losscarryforwards have been used.

1.15Cash and cash equivalentsCash comprises marketable securities, cash and cashequivalents that consist of highly liquid investmentswith maturities of three months or less and readilyconvert to a known cash amount and are subject to an insignificant risk of changes in value.

1.16Treasury sharesInter Parfums shares held by the Group are recordedas a deduction from equity at cost. If sold, theproceeds are recorded directly under equity net of tax.

1.17Commitments and contingenciesPension benefits

This reserve is maintained to honor the company’semployee pension benefits commitments andcorresponds to the present value of the payments towhich employees are entitled, under the collectivebargaining agreement, once they retire. For themeasurement of retirement indemnities for 2008,Inter Parfums adopted the procedure for voluntaryseverance agreements introduced on July 23, 2008extending the interprofessional agreement of January11, 2008. This procedure provides for the systematicthe signature of a severance agreement by theemployer and the employee specifying the terms andconditions of the termination. Because last yearmethod involving compulsory retirement wasapplied, the impact of this change in the assumptionsused for calculation was dealt with under past servicecosts. The projected unit credit was applied. This method takes into account rights and wagesprojected to term, the probability of payment as wellas the prorated amount of seniority so thatcommitments correspond to the value of servicealready rendered by employees.

Accordingly, the calculation of commitments forseverance benefits involves estimating the probablepresent value of projected benefit obligations (PBO), i.e.

the rights of employees at the time of departure takinginto account the probability of departure and death of the employees before term as well as the impact of revaluations and discounts. This projected benefitobligations is then prorated to take into accountseniority of the employees of the company on thecalculation date.

Other commitments and contingencies

Allocations are made to reserves for all clearly definedrisks and expenses when past or current events rendertheir occurrence likely. These reserves are revalued atthe end of every fiscal year to reflect changes in theirimpact or likelihood of occurrence.

1.18Financial instrumentsDerivative financial and hedging instruments areused by the Group to reduce exposure to interest rateand foreign exchange risks. Such instruments are notused for speculative purposes.

Two swaps to cover interest-rate risks in connectionwith Lanvin loans of 2004 and 2007 linked to 3month Euribor were implemented on the date theloan agreements were concluded. In compliance withIAS 39, the difference in the market value of thisinstrument and the notional amount is recorded inthe income statement. This same principle is appliedfor the associated caps and floors.

The company has recourse to forward exchangecontracts and cash flow hedges. These contractsdestined to hedge exposure of trade receivables inforeign currencies (primarily the US dollar andSterling pound) have maturities of three to sixmonth. Currency gains and losses from theseinstruments are recognized in the income statement.

In addition, hedges future sales in US dollars wereacquired at the end of 2008. These hedges cover80% of budgeted sales in this currency for 2009. In accordance with IAS 39, these hedges of projectedcash flows are accounted for as cash flow hedges.Hedge accounting is applicable if the hedge isformally defined and documented on inception ofthe hedging relationship and it is demonstrated thathedging relationship will be highly effective over thelife of the hedging instrument. At year-end, hedginginstruments corresponding to these criteria arerecognized in the balance sheet at fair value. The gainor loss on the hedging instrument determined to be effective shall be recognized directly in equity. In 2009, revenue will be restated to eliminate theimpact of these hedges.

1.19BorrowingsOn initial recognition, borrowings are measured at fair value to which are added transaction costsdirectly attributable to the issuance of the liability.

At year-end, borrowings are recognized at amortizedcost according to the effective interest rate method.


1.20Other liabilitiesOther financial debt and operating liabilities aremeasured at fair value on initial recognition. This amount generally corresponds to the amount of the invoice in the case of short-term payables.

1.21Stocks optionsIFRS 2 requires that a charge be recorded in the income statement with a corresponding increaseto reserves representing advantages granted tobeneficiaries of stocks options. For the measurementof these advantages, the company uses the Black &Scholes model. This model takes into account thecharacteristics of the plans (exercise price, exerciseperiod), market data at time of grants (risk-free rate,share price, volatility, projected dividends) andassumptions the behavior of beneficiaries. Changesoccurring after the grant date do not have an impacton this initial valuation. The value of the options isrelated notably to their expected lifespan that thecompany considers corresponds to the holding periodprovided for under tax provisions. This expense isrecognized over the duration of the vesting period.

1.22Registration of trademarksUnder IAS 38, expenses incurred in connection withthe registration of each trademark are not capitalizedand are expensed under “research and consulting costs”.

1.23Earnings per shareBasic earnings per share are calculated using theweighted average number of shares outstanding duringthe year and excluding treasury shares.

Fully-diluted earnings per share are calculated basedon the average number of shares outstanding, afterexcluding only treasury shares destined to be held on a long-term basis and adjusted for the effects of alldiluted potential ordinary shares.

2.BASIS OF PRESENTATION

2.1Presentation of the income statementThe consolidated financial statements of thecompany are presented by function. Under thisformat, expenses and income are broken down by function (cost of sales, selling expenses,administrative expenses) and not to the nature of the origin of expenses and income.

2.2Presentation of the balance sheetThe balance sheet is presented based on aclassification between current and non-currentliabilities.

2.3Segment reportingSegment information presented in this report is basedon the segments used by management to monitorGroup operations.

2.3.1 Primary segment reporting format:business segments

The company is organized and focused around twoprofit centers: selective perfume and cosmetics. Thecosmetic sector currently accounts for less than 10%of sales and is expected to expand in the years ended.

Details on these two sectors for which the companypossesses performance indicators are disclosed below.

2.3.2 Secondary segment reporting format:geographical segments

The company that has a significant internationaldimension analyzes sales by geographical segment.

All assets necessary for the company’s activity arelocated in France.


3.NOTES TO THE BALANCE SHEET

3.1Trademarks and other intangible assets

3.1.1Nature of intangible assets

In € thousands 2007 + - 2008

Gross value

Indefinite life intangible assetsNickel trademark 2,133 - - 2,133Lanvin trademark 36,323 - - 36,323

Finite life intangible assets S.T. Dupont upfront license fee 1,219 - - 1,219Burberry upfront license fee 5,000 - - 5,000Van Cleef & Arpels upfront license fee 18,250 - - 18,250Quiksilver license acquisition cost 490 - - 490

Other intangible assetsRights on molds for bottles 8,002 714 - 8,716Registration of trademarks 440 - - 440Other 421 91 (23) 489

Total cost 72,278 805 (23) 73,060

Amortization and depreciation

Indefinite life intangible assetsS.T. Dupont upfront license fee (957) (103) - (1,060)Burberry upfront license fee (1,126) (450) - (1,576)Van Cleef & Arpels upfront license fee (1,521) (1,521) - (3,042)Quiksilver license acquisition cost (54) (44) - (98)

Finite life intangible assetsRights on molds for bottles (5,956) (959) - (6,915)Registration of trademarks (440) - (440)Other (313) (82) 23 (372)

Total amortization and depreciation (10,367) (3,159) 23 (13,503)

Total net 61,911 (2,354) - 59,557


Nickel trademark

As Inter Parfums is the owner of the Nickel brand,acquired on April 1, 2004, no amortization wasrecognized in its balance sheet. The brand is tested for impairment once a year on December 31.

Lanvin trademark

As Inter Parfums acquired ownership for the Lanvintrademark and brand name for class 3 products inJuly 2007 no amortization was recognized in itsbalance sheet. The brand is tested for impairmentonce a year on December 31.

S.T. Dupont upfront license fee

An upfront license fee of €869,000 paid on April 1,1997 is amortized over 11 years. In March 2006, an additional license fee of €350,000 was paid to be amortized over the remaining term of the licenseagreement.

Burberry upfront license fee

The upfront license fee of €3 million paid on July 1, 2004 is amortized over the 12.5 year term ofthe Burberry license agreement. In September 2006an additional license fee of €2 million was paid to be amortized over the remaining term of thelicense agreement.

Van Cleef & Arpels license fee agreement

An upfront license fee of €18 million was paid on January 1, 2007 and is amortized over the term of the 12-year term of the Van Cleef & Arpels licenseagreement.

Quiksilver acquisition cost

Costs incurred in connection with the acquisition of the Quiksilver license agreement of €490,000 are amortized over its 12 year term.

Rights on molds for bottles

Rights on molds for bottles are amortized over 5 years.Design costs are amortized over 3 years.

3.1.2 Impairment tests

Nickel trademark

An impairment test was performed on December 31,2008, using the discounted cash flow method. No impairment was recorded.

Lanvin trademark

An impairment test was performed on December 31,2008, on the basis of the present value of future cashflows discounted to infinity and the price-to-salesratio method. On the basis of these methods, noprovisions were recorded.

Upfront license fees

All upfront license fees were measured on December31, 2008 using the discounted cash flow method. No provision was recorded.

For all discounts, the weighted average cost of capital(WACC) of 9.50% is applied.

Analysis of sensitivity

A one point fluctuation in the discount rate before taxor in the gross right to infinity would not result in animpairment of trademarks and other intangible assets.

3.2Goodwill

Goodwill from the 100% shareholding in Nickel wasrecognized in the balance sheet at December, 31 2007.This goodwill corresponds to the initial acquisitionof a 67.57% stake in June 2004 for €6,910,000followed by 32.43% in June 2007 for €3,518,000.The obligation to buyout the 32.43% minority stakerecognized under liabilities in the financial statementsof December 31, 2006 was settled upon thecompletion of this transaction the first half of 2007.

At December 31, 2007, the allocation of the costprice broke down as follows:

In € thousands

Acquisition cost 10,428

Net equity purchased 2,879Allocation to intangible assets 2,133Allocation to deferred tax assets 969Allocation to deferred tax liabilities (755)Fair value of acquired assets and liabilities (5,226)Goodwill 5,202

This goodwill is tested for impairment on December 31, 2008 using the price-to-sales ratiomethod. This test resulted in an additionalimpairment of €566,000 resulting in a totalprovision of €1,388,000.


3.3Property, plant and equipmentIn € thousands 2007 + - 2008

Fixtures, improvements, fittings 2,717 1,002 - 3,719Office and computer equipment and furniture 1,370 58 (37) 1,391Molds for caps 4,264 1,018 - 5,282Other (1) 598 165 - 763

Total cost 8,949 2,243 (37) 11,155

Accumulated depreciation (1) (5,581) (1,449) 37 (6,993)

Total net 3,368 794 0 4,162

(1) Including fixed assets held under finance leases (vehicles) for a gross amount of €333,000 and an accumulated depreciation of €190,000.

3.4Inventories and work in progressIn € thousands 2007 2008

Raw materials and components 25,004 23,570Finished goods 35,299 52,054

Total cost 60,303 75,624

Allowance for raw materials (2,111) (1,924)Allowance for finished goods (1,846) (2,906)

Total provisions (3,957) (4,830)

Total net 56,346 70,794

3.5Trade receivables and related accounts


Total cost 76,936 80,766Provisions (1,326) (712)

Total net 75,610 80,054

Maturities for trade receivables at break down as follows:


Outstanding 59,451 56,8700 - 30 days 12,694 17,74831 - 60 days 524 3,08861 - 90 days 2,166 77More than 90 days 2,101 2,983

Gross value 76,936 80,766

3.6Other receivables


Accruals 2,896 2,090Company current accounts - 1,306Value-added tax 1,497 1,145Hedging instruments 892 4,836Other 1,206 736

Total 6,491 10,113

Hedging instruments include the market value of those implemented at the end of 2008 to hedge budgetedsales in US dollars for 2009.

3.7Cash and cash equivalents


Certificates of deposit 34,000 12,000Money-market mutual funds 23,221 14,239Bank accounts 3,195 4,141

Cash and cash equivalents 60,416 30,380

3.8Shareholders’ equity

3.8.1 Common stock

As of December 31, 2008, Inter Parfums’ capital was composed of 13,391,980 shares full paid-up with a parvalue of €3, 75.3%-held by Inter Parfums Holding.

For the period under review, capital increases result from the exercise of stock options and the capital increasein connection with the bonus issue of June 16, 2008 on the basis of one new share for every 10 shares held.

3.8.2 Stock option plans

Managers and employees of Inter Parfums and its subsidiaries benefit regularly from stock option plans.


The characteristics of plans currently in force are as follows:

Plans Number of Number of Grant Vesting Subscription beneficiaries options date period price

granted atinception

Plan 2001 55 45,700 04/27/01 4 years €17.50Plan 2002 57 51,200 08/26/02 4 years €9.20Plan 2003 48 34,600 26/08/03 4 years €15.10Plan 2004 74 47,000 03/25/04 4 years €22.10Plan 2005 85 112,700 05/26/05 4 years €20.60Plan 2006 84 98,800 06/01/06 4 years €26.30Plan 2008 (IP Inc.) 96 84,500 02/14/08 4 years $11.30

(1) Subscription price adjusted for bonus issues.

In the period, changes in plans issued by Inter Parfums SA break down as follows:

Plans Options Conversions Bonus Cancellations Options outstanding in the share and the outstandingat 12/31/07 period grants period en vie au

12/31/08

Plan 2001 39,867 (39,857) - (10) -Plan 2002 63,745 (26,638) 6,012 - 43,119Plan 2003 83,786 (8,711) 8,238 - 83,313Plan 2004 118,873 (1,862) 11,906 - 128,917Plan 2005 118,760 - 11,905 - 130,665Plan 2006 116,402 - 11,673 - 128,075

541,433 (77,068) 49,734 (10) 514,089

At December 31, 2008, the potential number of Inter Parfums SA shares that may be created is 514,089.

In addition, all employees of the Group benefited in February 2008 from a stock option plan created by the parent company Inter Parfums Inc. This plan was recognized in accordance with IFRIC 11 and will becharged to Inter Parfums SA by the parent company.

Benefits granted to employees in the form of stock options recognized as additional compensation, inaccordance with IFRS 2, were calculated using the Black & Scholes model. The impact of this calculation,including the US plan, represents an expense that is recognized over the duration of the vesting period. This expense amounted to €524,000 for 2008 and €639,000 for 2007.

The estimation of the fair value of each stock option based on the Black & Scholes model is calculated on the grant date on the basis of the following assumptions:

Plans Fair value Risk-free Dividend Volatility Share price of the option interest yield rate retained

rate for the calculation

Plan 2002 €10.96 3.00% 1.00% 35% €31.97

Plan 2003 €14.62 3.00% 1.00% 41% €44.00

Plan 2004 €12.48 4.20% 1.00% 23% €64.75

Plan 2005 €6.76 4.50% 1.00% 22% €30.25

Plan 2006 €10.37 4.60% 0.94% 25% €35.00

Plan 2008 (1) $3.96 2.72% 1.20% 39% $11.59

(1) The 2008 plan was created by the parent company Inter Parfums Inc.

For all these plans, the stock options have terms of six years.

3.8.3 Treasury shares

Within the framework of the share repurchase program authorized by the French financial market authority(Autorité des Marchés Financiers) on April 25, 2008, 40,375 Inter Parfums shares were held by the company as of December 31, 2008.


(1)

Changes in the period break down as follows:

In € thousands Number of shares Value

At December 31, 2007 12,620 395

Acquisitions 149,828 3,623Bonus share grant of June 18, 2008 3,294 -Disposals (125,367) (3,184)

At December 31, 2008 40,375 834

Management of the share repurchase program is assured by an investment services provider within the frameworkof a liquidity agreement in compliance with the conduct of business rules of the French association of investmentfirms (AFEI).

Purchases of shares under this program are subject to the following conditions:

- the maximum purchase price is €60 per share, excluding execution costs, and the minimum sale price €10per share excluding execution costs;

- the total number of shares acquired may not exceed 5% of the capital stock outstanding.

3.8.4 Minority interests

Minority interests that concern the percentage not held (49%) in the European subsidiaries (Inter ParfumsDeutschland GmbH, Inter España Parfums et Cosmetiques S.L., Inter Parfums Srl et Inter Parfums Ltd) breakdown as follows:

In € thousands 12/31/07 12/31/08

Reserves attributable to minority interests 33 370Earnings attributable to minority interests (375) (536)


Minority shareholders have an irrevocable obligation and the ability to offset losses by an additional investment.

3.8.5 Information on equity

The company is not subject to specific regulatory or contractual obligations in respect to capital stock.

In compliance with the provisions of article L.225-123 of the French Commercial Code, the shareholders’meeting of September 29, 1995 decided to create shares carrying a double voting right. These shares must befully paid up and recorded in the company’s share register in registered form for at least three years.

Since 1998, the company has adopted a policy of distributing dividends that today represent approximately25% of consolidated earnings, destined to reward shareholders while at the same time associating them withthe Group’s expansion. In early May 2008, a dividend of €0.38 per share was paid or a €4.6 million.

In respect to financing, given the Group’s significant shareholders equity and low gearing, financing forsignificant operations required by the Group was obtained from banks in the form of medium-term loans.

In addition to the company’s commitment with lending institutions to comply with contractual covenants, the level of consolidated shareholders’ equity is regularly monitored to ensure the company continues to havesufficient financial flexibility to take advantage of all potential opportunities for external growth.

3.9Commitments and contingencies

In € thousands 2007 Increases Provisions Reversal 2008used in of unused

the period provisions

Reserves for severance benefits 546 166 - - 712

Non-current provisions 546 166 - - 712

Other commitments and contingencies 2,280 - - - 2,280

Total non-current provisions 2,826 166 - - 2,992

For the measurement of severance benefits payable on retirement for 2008, Inter Parfums has adopted theprocedure for voluntary severance agreements introduced on July 23, 2008 extending the interprofessionalagreement of January 11, 2008.


For 2008, the following assumptions were applied:

- voluntary termination at age 65;- a rate of 45% for employer payroll contributions for all employees;- a 5% average annual salary increase;- an annual rate of turnover for all employees under 55 years of age and nil above;- the TH 00-02 mortality table for men and the TF 00-02 mortality table for women;- a discount rate of 4.4%.

Past service costs not recognized of €607,000 were recorded under off-balance sheet items at December 31, 2008.

On the basis of these assumptions, the annual expense recorded under current income breaks down as follows:

- Cost of services rendered: €57,000- Financial expense: €11,000- Cost of actuarial losses: €98,000

Contingencies concerned primarily provisions for sales-related litigation with a supplier.

3.10Borrowings and other financial debt

3.10.1 Borrowings by a maturity and rate

In € thousands Total < 1 year 1 to 5 years > 5 years

Floating-rate (Euribor 3M) 18,683 6,583 12,100 -Fixed rate 11,238 3,594 7,644 -Automobile leases 153 94 59 -Bank overdrafts 4,076 4,076 - -

Total at December 31, 2008 34,150 14,347 19,803 -


Floating-rate (Euribor 3M) 25,656 7,556 18,100 -Fixed rate 14,687 3,450 11,237 -Automobile leases 189 87 102 -Bank overdrafts 4,303 4,303 - -

Total at December 31, 2007 44,835 15,396 29,439 -

All borrowings are in euros.

3.10.2 Analysis of borrowingsLanvin Lanvin Van Cleef &

2004 2007 Arpels

Inception date June 30, 2004 September 28, 2007 January 1, 2007Initial amount (in € thousands) 16,000 22,000 18,000Duration 5 years 5 years 5 yearsRate 3M Euribor +0.60% 3M Euribor +0.40% 4.1% fixed-rateRepayment schedule Quarterly Quarterly QuarterlyAmount payable at December 31, 2008 (in € thousands) 1,600 16,500 11,200

3.10.3 Additional disclosures

The floating-rate portion of the Lanvin debt contracted in June 2004 was covered by a swap. This swap at 12-month Euribor at year-end with a floor of 2.10% and a cap of 3.85%.

At December 31, 2008, on the basis of a notional of €1.6 million, a loss of €32,000 in connection with thisswap was recognized in the income statement and for which group did not apply hedge accounting in accordance with IAS 39. The market value of the swap at December 31, 2008 represented a negative amount for thecompany of €2,000.

The floating-rate portion of the Lanvin debt contracted in September 2007 was also covered by a swap against a fixed rate of 4.42%.


At December 31, 2008, on the basis of a notional amount of €16.5 million, a loss of €595,000 in connectionwith this swap was recognized in the income statement and for which the Group did not apply hedge accountingin accordance with IAS 39. The market value of the swap at December 31, 2008 represented a negative amountfor the company of €581,000.

3.10.4 Covenants

The loans obtained by the parent company are subject to the following covenant ratios:

- net debt to net equity;- net debt to cash flow.

These ratios are calculated by the company every year.

In 2008, these covenants were fully met. The current level of these ratios is considerably below the contractuallimits. As a result, the Group has considerable financial flexibility in respect to these commitments.

3.10.5 Undrawn confirmed credit lines

The balance of undrawn confirmed credit lines was €10 million at December 31, 2007. This credit line reached maturity in July 2008, without being drawn and was not renewed.

3.11Deferred taxDeferred taxes arise from timing differences between financial accounting and tax accounting. Deferred taxesfrom consolidation adjustments and loss carryforwards are recovered as follows:

In € thousands 2007 Changes Changes 2008through through reserves incomes

Deferred tax liabilitiesTiming differences between financial and tax accounting 155 - (107) 48Acquisition cost 784 - (23) 761Forward exchange hedges - 2,216 (194) 2,022Market value of securities 44 (44) - -Stocks options - 156 (156) -Gains (losses) on treasury shares - (79) 79 -Loan swap 15 - (15) -Remeasurement gains (losses) 734 - - 734Other 2 - 69 71

Total deferred tax liabilities 1,734 2,249 (347) 3,636

Deferred tax assetsTiming differences between financial and tax accounting 740 - 8 748Loan swap - - 201 201Inventory margin 871 - (118) 753Recognition of loss carryforwards (1) 1,723 - (1,723) -Other 46 - (5) 41

Total deferred tax assets before depreciation 3,380 - (1,637) 1,743

Depreciation of deferred tax (1) (898) - 898 -

Net deferred tax (1) 2,482 - (739) 1,743

(1) Tax losses recognized and depreciation at the end of 2007 concerned primarily Nickel. Following the merger by absorption of Nickel, the tax losses were used by Inter Parfums.

3.12Other short-term liabilitiesIn € thousands 2007 2008

Accrued credit notes 2,326 3,006Current account liabilities 8,531 -Tax and employee-related liabilities 6,587 6,072Other debts 3,637 3,271

Total 21,081 12,349


3.13Financial instrumentsThe following table presents financial instruments in the balance sheet according to the categories provided for under IAS 39.

In € thousands Notes Carrying Fair Fair value Available- Loans DerivativesAt December 31, 2008 value value through for-sale receivables

profit assets or payablesor loss

Non-current financial assets 478 478 - 70 408 -Trade receivables and related accounts 3.5 80,054 80,054 - - 79,025 1,029Other receivables 3.6 10,113 10,113 - - 5,277 4,836Cash and cash equivalents 3.7 30,380 30,380 - - 30,380 -

Assets 121,025 121,025 - 70 115,090 5,865

Borrowings 3.10 30,074 29,923 583 - 29,491 -Trade payables and related accounts 52,866 52,866 - - 52,866 -Short-term bank loans 3.10 4,076 4,076 - - 4,076 -Other liabilities 3.12 12,349 12,349 - - 12,349 -

Liabilities 99,365 99,214 583 - 96,170 -

In € thousands Notes Carrying Fair Fair Available- Loans DerivativesAt December 31, 2007 value value through for-sale receivables

profit assets or payablesor loss

Non-current financial assets 540 540 - 234 306 -Trade receivables and related accounts 3.5 75,610 75,610 - - 76,502 (892)Other receivables 3.6 6,491 6,491 - - 5,595 896Cash and cash equivalents 3.7 60,416 60,416 - - 60,416 -

Assets 143,057 143,057 - 234 142,819 4

Borrowings 3.10 40,533 38,742 (44) - 40,577 -Trade payables and related accounts 65,195 65,195 - - 65,195 -Short-term bank loans 3.10 4,303 4,303 - - 4,303 -Other liabilities 3.12 21,081 21,081 - - 21,081 -

Liabilities 131,112 129,321 (44) - 131,155 -

The fair value of all current assets and liabilities (trade receivables, payables, short-term loans and debt, cash at bank overdrafts), because of their short-term maturities, is considered identical to the carrying value. The fairvalue of non-current debt is determined by estimating future cash flows, loan by loan, that are updated at year-endon the basis of actual market rates at year-end for similar types of borrowing, as presented in the table above.

3.14Risk managementThe primary risks related to the Group’s business and organization concerning interest rate and foreignexchange rate risks remain very limited. The potential impacts of other risks on the company’s financials are not material.

3.14.1 Interest rate risks

The Group’s exposure to interest rate is primarily from debt. The objective of the Group’s policy is to ensure a stable level of financial expense through the use of hedges in the form of interest rate swaps and the use offloor and caps.

These financial instruments are not eligible for hedge accounting under IAS 39. The Group nevertheless considers that these transactions are not speculative in nature and are necessary to effectively manage its interest rate exposure.


Sensitivity to interest rates

The interest expense recorded in 2008 on medium-term debt represents the maximum expense in light of theceiling provided for under the conditions of the cap and the fixed rate swap. Excluding the impact of hedges, a 1% increase in rates would increase in interest expense by €10,000 and 2009 while a 1% decrease wouldreduce interest expense by €10,000 before hedging.

3.14.2 Liquidity risk

The net position of financial assets and liabilities by maturity is as follows:

In € thousands < 1 year 1 to 5 years > 5 years

Financial assets 26,240 70 -Financial liabilities (10,271) (19,803) -

Net position before hedging 15,969 (19,733) -

Hedging of assets and liabilities (Swaps) 300 283 -

Net position after hedging 16,269 (19,450) -

Financial liabilities by year break down as follows:

In € thousandsAt December 31, 2008 2009 2010 2011 2012 Total

Floating-rate debt - nominal 6,000 4,400 4,400 3,300 18,100Floating-rate debt - interest 787 543 314 86 1,730Fixed rate debt - nominal 3,594 3,744 3,900 - 11,238Fixed rate debt - interest 406 256 100 - 762Interest rate swaps 300 169 86 28 583

In € thousandsAt December 31, 2007 2008 2009 2010 2011 2012 Total

Floating-rate debt - nominal 7,600 6,000 4,400 4,400 3,300 25,700Floating-rate debt - interest 1,102 787 543 314 86 2,832Fixed rate debt - nominal 3,450 3,594 3,744 3,900 - 14,688Fixed rate debt - interest 550 406 256 100 - 1,312Interest rate swaps (13) (10) (8) (7) (6) (44)

3.14.3 Foreign exchange risk

Net positions of the Group in the main foreign currencies are as follows:

In € thousands USD GBP YEN CAD

Assets 26,014 2,054 1,126 360Liabilities (2,404) (187) (314) (21)

Net position before hedging 23,610 1,867 812 339

Currency hedges 1,030 (86) 14 -

Net position after hedging 24,640 1,781 826 339

In addition, because a significant portion of the Group’s sales are in foreign currencies, it incurs a risk fromexchange rate fluctuations, primarily from the US dollar (33.6% of sales) and to a lesser extent the pound sterling(8.0% of sales) and the Japanese yen (2.2% of sales).


Sensitivity to foreign exchange risk

The Group considers that a 10% fluctuation in theexchange rate of the US dollar in relation to the eurorepresents a pertinent risk factor that may reasonablyoccur within a given year. An immediate change inthe exchange rate (US dollar and pound sterling) of10% would result in a maximum positive currencyeffect of €7.2 million on sales and €5.9 million onoperating income. A 10% decrease of these sameexchange rates would have an equivalent negativecurrency effect of the same amounts.

Foreign exchange risk management policy

The Group’s exchange rate risk management policyseeks to cover budget exposures considered highlyprobable related to monetary flows resulting from US dollar sales, as well as trade receivables in the periodin US dollars, pound sterling and Japanese yens.

To this purpose, the Group has recourse to forwardexchange sales, according to procedures that prohibitspeculative trading:

- all forward currency hedging must be backed interms of amount at maturity by an identifiedeconomic underlying asset,- every identified budget exposure hedged for 80%.

At December 31, 2008, the Group had fully hedgedits positions in US dollars, pound sterling andJapanese yen for trade receivables recorded.

The 2009 sales budget was hedged for 80%, withadditional forward currency sales planned formidyear.

The nominal amounts of hedges open, based ontrade receivables measured at year-end are as follows:


Forward sales of US dollars 20,132, 26,026Forward sales of pound sterling 4,297 5,010Forward sales of Japanese yen - 745Difference in market and carrying value - -

The amount of hedges to cover 2009 sales andmaintain the level of the gross margin amounts toUS$90 million. The impact of the revaluation of thisportfolio at December 31, 2008 was €6,436,000 onshareholders’ equity and €570,000 on the financialexpense. These hedges were obtained at an averagerate for the US dollar of 1.264.

As a result of these hedges, sensitivity to foreignexchange risk has been reduced to a non-material level.

3.14.4 Counterparty risk

Financial instruments used by the Group to manageinterest rate and foreign exchange risks are obtainedfrom counterparties with benchmark ratings. At December 31, 2008, counterparties (according to Standard & Poor’s) were rated AA.

Cash is deposited with financial institutions with a rating issued by a specialized agency. At December 31, 2008, counterparties (according to Standard & Poor’s) were rated AA for 57%of the portfolio and A for 43%.


4.NOTES TO THE INCOME STATEMENT

4.1Breakdown of consolidated sales by brand


Burberry 152,920 169,031Lanvin 33,326 38,967Van Cleef & Arpels 11,899 21,018Paul Smith 18,000 13,403S.T. Dupont 11,119 11,464Roxy 6,560 7,379Nickel 3,310 2,657Christian Lacroix 3,850 1,274Other 1,139 (329)

Total 242,123 264,864

4.2Cost of sales


Raw materials, trade goods and packaging (103,111) (118,152)Changes in inventory and allowances 18,436 16,069POS advertising (5,833) (5,626)Transportation costs (911) (1,031)Other expenses related to the cost of sales (3,275) (3,568)

Total cost of sales (94,694) (112,308)

4.3Selling expenses


Advertising (42,413) (44,647)Royalties (25,664) (25,164)Staff costs (10,855) (11,224)Subcontracting (13,473) (14,367)Transportation costs (3,472) (3,407)Commissions (2,078) (2,086)Travel expenses (1,854) (2,235)Allowances and reversals (4,768) (2,340)Other selling expenses (2,151) (4,537)

Total selling expenses (106,728) (110,007)

4.4 Administrative expenses


Purchases and external costs (2,664) (2,658)Staff costs (2,487) (2,854)Taxes and related expenses (1,288) (459)Allowances and reversals (733) (794)Other administrative expenses (895) (959)

Total administrative expenses (8,067) (7,724)


4.5Other operating income and expensesAn additional goodwill impairment charge of €566,000 was recognized on the difference between the market valueof Nickel estimated at December 31, 2008 and its carrying value under “Other operating income and expenses”.

4.6Net financial expense


Interest income 1,682 1,246Interest and similar expenses (2,356) (2,891)

Net borrowing costs (674) (1,645)

Currency gains (losses) (158) (942)Other financial income and expense (4) (165)

Net financial expense (836) (2,752)

Other financial income and expense includes primarily impairment charges for “held-for-sale” securities recorded under “non-current financial assets”. This impairment charge was recorded because of the significantdecline in the fair value of these securities. The value of the securities acquired at a purchase price of €134,000 was €70,000 at December 31, 2008.

4.7 Income taxes

4.7.1 Analysis of income taxes


Current income tax (12,315) (10,531)Deferred tax arising from timing differences 319 115Deferred tax arising from consolidation adjustments 838 (508)

Total income taxes (11,158) (10,924)

4.7.2 Reconciliation of the effective tax expense and theoretical tax expense

The difference between the effective tax recorded and the theoretical tax expense calculated by applying the taxrate of 34.4% applicable for fiscal 2008 and 2007 to pretax income reflects the following.


Tax base 30,976 31,507Theoretical tax calculated at the standard rate (10,665) (10,848)Effect of tax rate change on deferred taxes (6) 309Depreciation of tax assets from loss carryforwards (140) (147)Permanent nondeductible differences (347) (238)

Income tax (11,158) (10,924)

4.8Earnings per shareIn € thousands, except number of shares and earnings per share in euros 2007 2008

Consolidated net income 20,193 21,119Average number of shares 11,480,164 12,719,676

Basic earnings per share (1) 1.76 1.66

Dilution effect of stock options: Potential fully diluted consolidated net income 182,575 66,499Potential fully diluted average number of shares outstanding 11,662,738 12,786,175

Diluted earnings per share (1) 1.73 1.65

(1) Not adjusted for bonus shares granted in 2007 and 2008.


5.SEGMENT REPORTING

5.1Primary segment information: business lines

In € thousands 2007 2008Perfumes Cosmetics Total Perfumes Cosmetics Total

Revenue 238,813 3,310 242,123 262,207 2,657 264,864Operating profit (loss) 33,263 (629) 32,634 35,242 (417) 34,825Impairment - (822) (822) - (566) (566)

Trademarks, licenses and goodwill 59,645 6,646 66,291 57,877 5,494 63,371Inventories 55,010 1,336 56,346 69,394 1,400 70,794Other segment assets 147,182 1,725 148,907 126,517 1,382 127,899

Total segment assets 261,834 9,710 271,544 253,788 8,276 262,064

Segment liabilities 104,741 1,105 105,846 80,989 1,162 82,151

Segment assets and liabilities consist of operating assets (liabilities) used primarily in France.

5.2Secondary segment information: geographical segmentsSales by geographical sector break down as follows:


North America 48,869 49,632South America 15,289 17,785Asia 31,621 33,911Eastern Europe 20,486 26,294Western Europe 83,315 85,263France 21,953 25,638Middle East 18,635 24,187Other 1,955 2,154

Total 242,123 264,864



6.OTHER INFORMATION

6.1Off balance sheet commitments

6.1.1 Summary of balance sheet commitments


Guaranteed minima on trademark royalties 233,175 220,299Headquarter rental payments 5,450 7,652Guaranteed minima for warehousing and logistics 10,650 7,950Firm component orders (inventories) 4,213 4,124Pension liabilities - 607

Total commitments given 253,488 240,632

6.1.2 Commitments given by maturity at December 31, 2008


Guaranteed minima on trademark royalties 220,299 24,612 103,417 92,270Headquarter rental payments 7,652 1,292 4,718 1,642Guaranteed minima for warehousing and logistics 7,950 2,800 5,150 -

Total contractual obligations 235,901 28,704 113,285 93,912

Firm component orders (inventories) 4,124 4,124 - -Pension liabilities 607 22 87 498

Total other commitments 4,731 4,146 87 498

Total commitments given 240,632 32,850 113,372 94,410

Maturities are defined on the basis of the contract terms (license agreements, leases, logistic agreements, etc.).

6.1.3 Other commitments

Commitments in respect to forward currency sales at December 31, 2008 amounted to $127,654,000,£3,731,000 and ¥95,806,000.

Act No. 2004-391 of May 4, 2005 on lifelong vocational training and social dialogue established an individualtraining benefit for employees in France (Droit Individuel à la Formation or DIF). Pursuant to this measure, the company has provided for training benefits of the basis of 21 hours per year and per employee. The numberof training benefits vested by Group employees totaled 5,794 hours at December 31, 2008 and 401 of traininghours under this provision were used by Group employees in 2008.

In compliance with obligations under German law, Inter Parfums, under the terms of a comfort letter issued at the end of June 2007, provided a guarantee without restrictions to ensure that its German subsidiary Inter Parfums GmbH, to be managed and funded in order to be able at all times to honor its payment obligations to all creditors.

At the end of July 2007, Inter Parfums acquired the Lanvin brand names and international trademarks underclass 3 for fragrance products and make-up from the Jeanne Lanvin SA Company. The Lanvin Company holdsa buy back option for the brands, which will be exercisable on July 1, 2025.

6.1.4 Commitments received

Commitments received in connection with forward currency sales at December 31, 2008 amounted to €97,150,000 for hedges for US dollars, €5,010,000 for pound sterling and €745,000 for Japanese yenrepresenting total commitments of €102,905,000.


6.2License agreements

Nature License Duration Expiration of licence inception date date

Burberry Original July 1993 13 years and 6 months - Renewal July 2004 12 years and 6 months December 2016

S.T. Dupont Original July 1997 11 years -Renewal January 2006 5 years and 6 months June 2011

Paul Smith Original agreement January 1999 12 years -Renewal July 2008 7 years December 2017

Christian Lacroix Original agreement March 1999 10 years and 10 months December 2010

Quiksilver Original April 2006 11 years and 9 months December 2017

Van Cleef & Arpels Original January 2007 12 years December 2018

The renewal of the Burberry license agreement on July 1, 2004 was accompanied by an option to extend the license by an additional five years and an option by Burberry Ltd to acquire the license at its market value at December 31, 2011.

6.3Proprietary brandsLanvin

In June 2004, Inter Parfums signed an exclusive worldwide license agreement with Lanvin effective July 1, 2004to create, develop and distribute fragrance lines under the Lanvin brand name for 15 years.

At the end of July 2007, Inter Parfums acquired the Lanvin brand names and international trademarks forclass 3 fragrance products and make-up from the Jeanne Lanvin company.

Inter Parfums and Lanvin also mutually agreed with immediate effect to terminate the license agreementsigned in July 2004 and at the same time concluded a technical and creative assistance agreement in view ofdeveloping new perfumes based on net sales until June 30, 2019. The Jeanne Lanvin company holds a buyback option for the brands which will be exercisable on July 1, 2025.

Nickel

In April 2004, Inter Parfums acquired a majority stake in Nickel, a company specialized in skincare products for men.

In June 2007, Nickel became a wholly-owned subsidiary after Inter Parfums acquired the company’s remaining shares.

6.4InsuranceInter Parfums is named as beneficiary under a €15 million life insurance policy for Philippe Benacin.

6.5 Employee-related data

6.5.1 Employees by category

Number of employees at 12/31/2007 12/31/2008

Executive officers and management 77 82Supervisory staff - 9Employees 68 61

Total 145 152

6.5.2 Employees by department

Number of employees at 12/31/2007 12/31/2008

General Management 2 2Production & Operations 22 22Burberry Fragrances 25 27Luxe & Fashion 22 25France 51 49Finance & Corporate Affairs 23 27

Total 145 152

6.5.3 Wages and benefits


Total wages and benefits 14,959 15,946

Of which Management Committee members - wages, bonuses & social charges 2,488 2,923

Of which Management Committee members - share based payment expenses 213 208

In addition supplemental retirement benefits for executive management of, €109,000 million was paid in 2008.

6.6Information on related parties

6.6.1 Management Committee

The six members of the Management Committee exercise responsibilities in the areas of strategy, the management and oversight. They have employment contracts and receive compensation as follows:


Wages, bonuses & social charges 2,488 2,923Share based payment expenses 213 208

The executive officers Philippe Benacin and Jean Madar, cofounders of Inter Parfums SA are also executiveofficers and majority shareholders of the parent company Inter Parfums Inc.

In 2008, in this capacity they were granted a total of 65,750 stock options by Inter Parfums Inc.

6.6.2 Board of Directors

The ten members of the Board of Directors exercise responsibilities in the areas of strategy, managementconsulting, acquisitions and oversight. With the exception of directors that have employment contracts, they are paid directors’ fees:


Directors’ fees (1) 38 35

(1) Calculated on the basis of actual board meeting attendance.

6.6.3 Relations with the parent company

The accounts of Inter Parfums and its subsidiaries, through Inter Parfums Holding, are all fully consolidatedinto the accounts of Inter Parfums Inc., whose registered office is located at 551 Fifth Avenue, New York, NY 10176 USA, United States. No material transaction exists between Inter Parfums SA and Inter Parfums Inc.

6.6.4 Relations with subsidiaries

Inter Parfums’ subsidiaries Inter Parfums Deutschland GmbH, Inter España Parfums and Cosmetiques S.L.,Inter Parfums Srl, Inter Parfums Ltd and Inter Parfums Suisse Sarl. are fully consolidated. The maintransactions between these entities are of a commercial nature and concern the sale of products of the parentcompany to subsidiaries that assure the distribution in their respective markets. These transactions alsogenerate cash flows between the subsidiaries and the parent company. Subsidiary sales represent approximately15% of Group revenue.


6.7Auditors’ feesTotal auditors’ fees expensed in the income statement relating to their engagement as statutory auditors breaksdown as follows:

In € thousands MAZARS2007 % 2008 %

Work as statutory auditors and certification of individual and consolidated financial statements:Of the Issuer 195 63% 250 74%Of fully consolidated subsidiaries 116 37% 90 26%Other directly related assignments - - - -

Other services rendered by members of the auditor’s network to fully consolidated subsidiaries - - - -

Total 311 100% 340 100%

In € thousands SFECO & FIDUCIA2007 % 2008 %

Work as statutory auditors and certification of individual and consolidated financial statements:Of the Issuer 84 97% 84 97%Of fully consolidated subsidiaries - - - -Other directly related assignments 3 3% 3 3%

Other services rendered by members of the auditor’s network to fully consolidated subsidiaries - - -

Total 87 100% 87 100%

6.8Post-closing eventsNone.


42 Two thousand eight registration document Inter Parfums. Corporate governance

CHAPTER THREE

CorporategovernanceBoard of Directors 43

Management committee 48

Compensation of executive management 48

Special report of the Board of Directors on stock options 51

Chairman’s report on the work of the Board and internal control 52

1.BOARD OF DIRECTORS

Inter Parfums adopted the form of a société anonyme,the French equivalent of a joint stock company,when it was created in 1989. It is governed by aBoard of Directors and a Management Committee.

The Board of Directors’ meeting of December 22,2008 reviewed the AFEP-MEDEF recommendationsof October 6, 2008 on compensation of executive officersof listed companies. It considered these recommendationsto be in line with the company’s own corporategovernance policy. This opinion was rendered publicin a press release dated December 24, 2008.

The Board of Directors also confirmed that the amendedAFEP/MEDEF corporate governance code is appliedby the company and referred to prepare the reportprovided for by article L.225-37 of the FrenchCommercial Code starting with the period in progress.

Composition of the Board of Directors

In spring 2004, the company strengthened the Boardof Directors that until then had four members, byappointing new board members for renewable six-yearterms to benefit from their additional expertise andexperience. On December 31, 2007 the Board ofDirectors had 10 members.

The Board of Directors’ meeting of November 22,2008 duly noted the resignation of Mrs. MarianneBenacin and Mr. Raoul Madar as directors and proceeded to appoint, on a temporary basis, Mrs. Chantal Roos and Mr. Frédéric Garcia Pelayo to serve as directors, subject to the ratification oftheir appointment by the next shareholders’ meetingto be held on April 24, 2009.

The Board ensures that at least 30% of its membersare independent directors. Directors are consideredindependent when they have no relation whatsoeverwith the company, group or its management thatcould compromise their free exercise of judgment. In line with recommendations applicable in Franceon corporate governance of the AFEP-MEDEF report,the board ensures the presence of independentdirectors subject to the following conditions:

- the director is not an employee or corporate officer(mandataire social) of the company nor an employeeor director of its parent company or of one of itsconsolidated subsidiaries, and has not been one duringthe previous five years;

- the director is not a corporate officer of a companyin which the company holds, either directly or indirectly,a directorship, or in which a directorship is held by an employee of the company designated as such or bya current or former (going back five years) corporateofficer of the company;

- the director is not a supplier, investment or commercial banker of the company or any companyincluded in the scope of consolidation;

- the director does not have any close family ties witha corporate officer of the company;

- the director has not been an auditor of the companyover the past five years:

- the director has not been a director of the companyfor more than 12 years; and

- the director does not have any legal ties with a shareholder owning directly or indirectly more than10% of the share capital or voting rights.

On the basis of these criteria, the board includesthree independent directors, Mrs. Chantal Roos, Mr. Maurice Aladhève and Mr. Michel Dyens.

To date, the Board has three members with the statusof employees resulting from an employment contractpredating their appointment as directors.

As a general rule, members of the Board of Directorshave an in-depth or multidisciplinary experience of the business world in international markets. Theyare subject to conduct of business rules that includenotably obligations of secrecy and due diligence inthe performance of their duties ensuring the effectivework of the Board in a collegiate nature. Directorsare provided not only with information before eachmeeting but also on a permanent basis concerning all strategic and financial matters necessary to performtheir duties in the most effective manner.

The Board of Directors’ meeting of March 3, 2009adopted a board charter reproduced in full below.

43Two thousand eight registration document Inter Parfums. Corporate governance


BOARD CHARTER

Introduction

The purpose of this Charter is to set forth the rulesof procedure adopted by the Board of Directors on March 3, 2009.

Applicable to all current and future directors, thisCharter is destined to supplement the provisions ofthe law, regulations and the company’s bylaws, in theinterest of the company and its shareholders in order to:

- define the composition, organization, duties andpowers of the Board;

- contribute to the optimal performance of meetingsand proceedings;

- establish the rules on corporate governance withinthe framework of rules requiring that the companyadopt the principles of transparency, loyalty and performance vis-à-vis its shareholders.

This Board Charter under no circumstances replacesthe company’s bylaws but rather translate its provisionsinto practice. This Charter is destined for internaluse for the purpose of ensuring the effectiveness ofthe work of the Board. As such it cannot be consideredbinding on the company in respect to claims by third parties.

1.COMPOSITION OF THE BOARDOF DIRECTORS

The Board of Directors includes a maximum of 18 members with at least three selected from independentpersons having no ties of interest with the company sothat they are entirely free in the exercise of their judgment.

Directors are considered independent according to the criteria of the AFEP/MEDEF code of corporategovernance when they have no relation whatsoeverwith the company, its group, or management thatcould compromise the free exercise of their judgmentor where there exists no potential conflict of interestwith the company, its management or group.

2.MISSIONS AND POWERS OF THE BOARD OF DIRECTORS

2.1 Strategic bodyThe mission of the Board of Directors is to determinethe strategy of the company and ensure that this strategy is implemented. Subject to the powers grantedto shareholders’ meetings and within the limits of thecompany’s corporate purpose, the Board may addressany matter pertaining to the proper management of thecompany and settle all items of business relating thereto.

In addition to the attributes provided for by law and regulations, the Board may be called to addressin particular the following matters:

- assess the environment of the company and analyzeopportunities for external growth through acquisitions;

- review projects involving material investments or not relating to the company’s ordinary operatingactivities;

- analyze major strategic projects presented to executivemanagement and their impact on the economic andfinancial situation of the company;

- approve the annual budget submitted by executivemanagement;

- implement procedures for control or verification it considers appropriate.

And in general, the Board ensures the merits of anymeasure adopted for the strategic development of thecompany and ensuring the solidity of the company’sbalance sheet.

2.2 Audit committee function On March 3, 2009 the Board of Directors decidedthat in light of the company’s organization and structure,an independent audit committee would not be establishedand that in consequence, in accordance with the provisions provided for under article L.823-20 of the French Commercial Code, it would exercise the functions of audit committee in plenary session.

In connection with a performance of the functions of audit committee, the primary task of the Board of Directors are to:

- ensure the pertinence and consistent application of accounting methods adopted to prepare consolidatedand statutory financial statements;

- ensure that the process for producing financialinformation is based on internal procedures for collecting information that guarantee the quality and exhaustive nature of this information;

- monitoring the performance of internal control andrisk management systems;

- monitoring compliance with the principles of independence and objectivity of the auditors.

To this purpose, it may review in particular:

- draft versions of the statutory and consolidatedinterim and annual financial statements, and on theseoccasions submit questions to the auditors;

- the scope of consolidation used to prepares financialstatements;

- the performance of internal control systems by evaluating the organization principles and functioningof internal audit and by verifying the process foridentifying risks. It also reviews the audit missionsand evaluation of the internal control system carriedout by the Finance Department;

- procedures carried out by the auditors in the performance of their missions;

- conditions for renewing the appointments of auditorsby implementing a selection process and issuing an opinion concerning the amount of fees requestedfor the performance of their missions.

3.PROCEDURES FOR EXERCISINGGENERAL MANAGEMENT

3.1The Chairman of the Board of Directors The Chairman, appointed by the Board of Directorsfrom among its members, organizes and manages the work of the Board on which he reports to theshareholders’ meeting. He ensures that managementbodies of the company are effectively run and, inparticular, that directors are able to perform theirduties. The Chairman may request any documents or specific information to assist the Board of Directorsin connection with preparing its meetings.

The Chairman actively contributes to the performanceof the duties of directors by exercising a role of intermediary between the latter and the main participantsin implementing the company’s strategic objectives.

3.2General managementThe Board of Directors determines the manner thatGeneral Management is exercised, under its responsibility,either by the Chairman of the Board of Directors, or by a person appointed by the latter with the titleof Chief Executive Officer (Directeur Général).

The Board of Directors’ meeting of December 19, 2002decided not to separate the functions of Chairman ofthe Board of Directors from those of Chief ExecutiveOfficer. In this respect, and subject to the powersgranted by law to general meetings and the limitationsprovided for by the provisions of this Board Charter,the Chairman of the Board of Directors exercises the functions of Chief Executive Officer and is vestedwith the broadest powers to act in all circumstancesin the name of the company with the exception ofthe following strategic decisions that are submittedfor approval to the Board of Directors:

- any financial commitment (immediate or deferred)for an amount exceeding €10 million per transactionand having a material impact on the company’s scopeof consolidation, including mainly the acquisition ordisposal of assets or equity investments in companies;

- any decision, regardless of the amount involved,that could potentially materially affect the strategy of the company or materially modify the scope of itsnormal activity.

On proposals by the Chief Executive Officer, the Boardof Directors may appoint one or more individuals to assist the Chief Executive Officer with the title of Executive Vice President (Directeur Général Délégué).

4.FUNCTIONING OF THE BOARDOF DIRECTORS

4.1Calling and holding of Board meetingsNotice of meetings may be issued by any meansincluding orally and may be transmitted by theSecretary of the Board within at least eight days beforeeach meeting.

The Board meets as often as the interests of the companyrequires, and in general, at least five times the year,with three of these meetings devoted to reviewing the budget, strategy and the activity of the company.Decisions by the Board are adopted on the basis of a simple majority. In the case of split vote, theChairman of the meeting has the casting vote.

The Board establishes for the year according to theproposal of the Chairman a schedule for its meetings,with the exception of extraordinary meetings.

4.2Participation in meetings through videoconferencing or telecommunications media

In accordance with applicable regulations and article 14 of the company’s bylaws, directors who participate in Board meetings through videoconferencing or telecommunications technology are considered present for calculating the quorum and majority.

The Chairman ensures that videoconferencing andtelecommunications technologies used guarantee theeffective participation of all parties in the meetings.The proceedings must be broadcast without interruption.Measures necessary to identify each party and verifythe quorum must be assured. Failing this, the Boardmeeting may be adjourned.

The attendance register and the minutes must indicatethe names of directors having participated throughvideoconferencing or telecommunications means.

Remote participation using the technologies is expresslyprohibited for proceedings concerning the followingdecisions:

- the approval of the company’s statutory and consolidated financial statements;

- preparing the management report to be included in the Group’s management report.


4.3Transmission of informationAll directors are provided with an agenda for eachmeeting documents and information required to makedecisions on the items of business on an informed basis.

It is the responsibility of all directors to ensure thatthey possess all information they consider necessaryfor the effective conduct of proceedings of the Boardand, when applicable, request this information whenthey consider that it has not been made available.

Furthermore, directors are kept regularly informed,between the meetings of all events or transactions of a material nature for the strategic priorities of the company.

5.CODE OF CONDUCT OF DIRECTORS

5.1Obligations of discretion and secrecyConcerning non-public information acquired in connection with their duties, directors shall beconsidered subject to a true obligation of professionalsecrecy that exceeds the obligation of discretion providedfor by article L.225-37 subsection 5 of the FrenchCommercial Code.

In general, directors shall refrain from speaking individually outside the collegial framework of theBoard of Directors about matters considered therein.Outside the company, directors undertake to respectthe collegial nature on any oral or written communication that they may issue.

5.2Duties of independence Directors have a duty to act in all circumstances in the interest of the company and all shareholders.To this purpose, they are subject to an obligation to inform the Board of any situation involving a conflict of interest, even a potential conflict of interest,and must refrain from voting in the proceedings relating thereto.

And in general, directors shall be prohibited fromengaging in transactions in the shares of the companyand/or the group if they possess privileged information.Each party is personally responsible for assessing theprivileged nature of information in their possession,and, in consequence, to authorize or prohibit any useor transmission of such information, and to engagein any transactions in the company’s shares.

And in any case, directors undertake to comply withits obligation to refrain from any dealings in thecompany’s shares for a period of 15 days prior to:

- the publication of the press release on annual results;- the publication of the press release on half-year results.

5.3Obligations of the due diligence Directors must devote to their duties the necessarytime and attention. To this purpose, they will limitthe appointments that they hold to a reasonablenumber to ensure their regular participation in themeetings of the Board.

Directors have an obligation to obtain and requestwithin the appropriate delays from the Chairmaninformation necessary to effectively participate in the items of business to be addressed by the Board of Directors’ meetings.

5.4Obligation to report dealings in the company’s sharesDirectors and persons with whom they have closerelations must report to the AMF the purchase, sale,subscription or exchange of shares of the Companywhen the amount exceeds €5,000 for the calendaryear progress.

To this purpose, they will send their declaration to the AMF by electronic means within five tradingdays following the transactions and send at the sametime a copy of the declaration to the Secretary of theBoard of Directors of the company.

6.COMPENSATION

6.1Directors’ feesThe Board of Directors freely sets the amount of feesfor attendance subject to the limit allocated by thegeneral meeting. It allocates this amount equallyamong each of the members in proportion to thenumber of Board meetings each member participatedin during the prior year.

By express waiver of the Directors concerned, directors’fees are allocated exclusively to directors selected fromoutside the company.

6.2Compensation of directors for special assignmentsThe Board of Directors may entrust one of its memberswith a mission, for which it determines the conditionsand terms that are subject to approval by the Board,except by the Board member designated for this mission.The Board will determine notably the duration of themission as well as the procedures of payment of theamount and the reimbursement of expenses incurredin the performance of this mission. The Chairman is responsible for ensuring that this mission is properlycarried out according to the conditions approved by the Board to whom it regularly reports thereon.


Composition of the board and profiles

As of December 31, 2008 the composition of the Boardof Directors was as follows:

Philippe Benacin, Chairman and Chief ExecutiveOfficer of Inter Parfums (appointment renewed April 23, 2004, expiring at the close of the 2010annual shareholders’ meeting).

Philippe Benacin, 50, a graduate of the ESSEC businessschool and cofounder of the company with his partnerJean Madar, has served as Chairman and Chief ExecutiveOfficer of Inter Parfums SA since its creation in 1989.

Other appointments: Chairman of the Board ofDirectors of Inter Parfums Holding, President andVice Chairman of the Board of Inter Parfums Inc.(United States).

Jean Madar, Director (appointed April 23, 2004, expiringat the close of the 2010 annual shareholders’ meeting).

Jean Madar, 48 a graduate of the ESSEC business school,is the cofounder of the company with his partnerPhilippe Benacin.

Other appointments: Chief Executive Officer of Inter Parfums Holding , Chief Executive Officer andChairman of the Board of Inter Parfums Inc. (United States).

Maurice Alhadève, Independent Director (appointedby the shareholders’ meeting of April 23, 2004, expiringat the close of the 2010 annual shareholders’ meeting).

Other appointments: none.

Patrick Choël, Director (appointed by the shareholders’meeting of December 1, 2004, expiring at the close of the 2010 annual shareholders’ meeting).

Other appointments: Director of Inter Parfums Inc.(United States), Director of Parfums Christian Dior,Director of Guerlain, Director of Modelabs.

Michel Dyens, Independent Director (appointed by the shareholders meeting of April 23, 2004, expiring at the close of the 2010 annual shareholders’ meeting).

Other appointments: Director of Direct Panel,Chairman of Michel Dyens & Co.

Frédéric Garcia-Pelayo, Director and Executive VicePresident (holder of an employment contract precedingthe appointments - Appointed by co-optation bydecision of the Board of Directors’ meeting ofNovember 22, 2008 subject to ratification by thenext general meeting to be held on April 24, 2009,replacing Mr. Raoul Madar, resigning, whoseappointment expires at the close of the 2010 annualshareholders’ meeting).

Frédéric Garcia Pelayo, 51, EPSCI internationalexchange program graduate of the ESSEC BusinessSchool, has been Vice President for Export SalesDirecteur Export of Inter Parfums since 1994 andExecutive Vice President since 2004.


Jean Levy, Director (appointed by the shareholders’meeting of April 23, 2004, expiring at the close of the 2010 annual shareholders’ meeting).

Other appointments: Director of Inter Parfums Inc.(United States), Director of Price Minister SA,Director of Axcess Groupe SA, Director of MontBlanc SAS.

Chantal Roos, Independent Director(Appointed by co-optation by decision of the Board of Directors’ meeting of November 22, 2008 subjectto ratification by the next general meeting to be heldon April 24, 2009, replacing Mrs. Marianne Benacin,resigning, whose appointment expires at the close of the 2010 annual shareholders’ meeting).

Chantal Roos was Vice President for InternationalMarketing and subsequently Executive Vice Presidentwith Yves Saint Laurent Parfums and President of BeautéPrestige International, a subsidiary of the Shiseidogroup she created in 1990 to launch the Issey Miyakeand Jean-Paul Gaultier fragrances.

She joined the Gucci group in 2000 as President of the Yves Saint Laurent Beauté division, becoming subsequently in 2007, Strategic Adviser to theChairman and Chief Executive Officer. In 2008, shelaunched her own company specialized in the creationand development of fragrance and cosmetic brands.


Philippe Santi, Director and Executive Vice President(holder of an employment contract preceding theappointment by the shareholders’ meeting of April 23,2004, expiring at the close of the 2010 annual shareholders’ meeting).

Philippe Santi, 47, graduate of the École Supérieur de Commerce of Reims and a public accountant hasserved as the Chief Financial and AdministrativeOfficer of Inter Parfums SA since 1995 and ExecutiveVice President since 2004.

Other appointments: Director of the parent companyInter Parfums Inc.

Catherine Bénard-Lotz, Director (holder of anemployment contract preceding the appointment bythe shareholders’ meeting of April 23, 2004, expiringat the close of the 2010 annual shareholders’ meeting).Other appointments: none.

Absence of condemnations

To the best of the Company’s knowledge, in the lastfive years none of the members of the Board ofDirectors have been:

- convicted for fraud or penalties for infractions rendered by statutory or regulatory authorities;- involved in a bankruptcy, receivership or liquidationproceeding as a director or officer;- disqualified from serving as a director or officer or participating in the management of the operationsof an issuer.

Absence of potential conflicts of interest

To the best of the Company’s knowledge, there existno potential conflicts of interest between the dutiestowards the company and the personal interestsand/or other duties of one of the members of the board.


Absence of service contracts with board members

To the best of the Company’s knowledge, none ofthe board members is bound by service agreementswith the company or one of its subsidiaries providingfor the grant of benefits under its terms.

2.MANAGEMENT COMMITTEE

Mission

The purpose of the Management Committee, led bythe Chairman and Chief Executive Officer, is to addressoperational issues related to the development of thecompany.

Composition as of December 31, 2008

Philippe Benacin, Chairman and Chief ExecutiveOfficer.

Philippe Santi, Executive Vice President, Chief Financial and Administrative Officer.

Frédéric Garcia-Pelayo, Executive Vice President,Chief International Officer.

Hugues de la Chevasnerie, Vice President, BurberryFragrances.

Angèle Ory-Guénard, Vice President, Export Sales -Burberry Fragrances.

Jérôme Thermoz, Vice President, French Distribution.

Axel Marot, Vice President Burberry Fragrances.

The Management Committee met six times in 2008(six times in 2007). and discussed the following itemsof business:

February: 2007 closing, 2008 first-quarter sales forecasts, review of launches by brand, organizationof the French team, external growth project;

April: 2008 first-quarter sales, second-quarter forecast,marketing projects, status of Spanish partnership,external growth projects;

June: 2008 second-quarter sales, 2008 first-half earningsforecasts, analysis of gross margins, new premises, 2009launches, preparation of 2009 distributor seminar;

July: 2008 first-half sales, situation of European subsidiaries, review of brand launches, new premises;

September: summary of 2008 first-half results, 2008third-quarter sales, 2008 full-year forecasts, marketingprojects, growth projects, 2009 budget, foreignexchange hedging project;

November: budget 2009, 2008 sales forecasts, marketing review by brand, warehousing study,French team, summary of foreign exchange hedges.

3.COMPENSATION OF EXECUTIVE MANAGEMENT

In connection with the preparation of this registrationdocument, the Board of Directors has analyzed the different components of executive compensationand benefits in light of the principles set forth in theAFEP-MEDEF recommendations of October 6, 2008.It reviewed the procedures in place for determiningcash compensation and benefits and benefits of all kindsgranted to corporate officers that are presented belowin detail.

In general, the Board of Directors sets the compensationpolicy for officers both in reference to market practicein comparable sectors and the size of the company innotably in respect to sales and the number personnel.

Compensation of officers for 2008

Compensation of officers consists of both fixed andvariable components. Fixed compensation takes intoaccount the level of responsibilities, experience andperformance. Variable compensation is determined in relation to the company’s achievement of overallperformance objectives and events related to each fiscal year.

One half of variable compensation is determined in accordance with net sales, operating income andnet profit, and half in relation to qualitative criteriaof performance. This latter criteria is evaluated in respect to the contribution of corporate officers to achieving the objectives of the company andresults actually obtained.

On this basis, compensation paid to executives as officers or salaried employees in connection withemployment contracts concluded prior to becomingofficers is disclosed below.


Total compensation Total compensation Total compensation paid for 2006 paid for 2007 paid for 2008

Philippe Benacin (1)

Chairman and Chief Executive OfficerNet fixed compensation €144,000 €153,600 €176,640 Net variable compensation €117,600 €115,200 €114,400Benefits in-kind €65,440 €68,100 €70,800Supplemental executive retirement plans €7,500 €7,720 €7,990

Philippe Santi (2)

Director - Executive Vice PresidentNet fixed compensation €144,000 €153,600 €176,640 Net variable compensation €125,600 €141,600 €124,800 Supplemental executive retirement plans €7,500 €7,720 €7,990

Frédéric Garcia-Pelayo (3)

Executive Vice PresidentNet fixed compensation €144,000 €153,600 €176,640 Net variable compensation €125,600 €141,600 €124,800 Benefits in-kind - - €5,130 Supplemental executive retirement plans €7,500 €7,720 €7,990

Catherine Bénard-Lotz (4)

DirectorNet fixed compensation €61,400 €65,300 €74,400 Net variable compensation €31,700 €42 ,400 €31,200 Supplemental executive retirement plans €6,500 €7,720 €7,990

Jean Madar (5)

DirectorGross fixed compensation $400,000 $400,000 $400,000Gross Bonus - $100,000 -

(1) Philippe Benacin does not have an employment contract with the company. He exercises his functions as Chairman and Chief ExecutiveOfficer pursuant to his appointment as a corporate officer by the Board of Directors.

(2) Compensation paid to Philippe Santi as a salaried employee with the position of Director of Finance and Corporate Affairs under the terms of an employment contract predating his appointment as Executive Vice President (Directeur Général Délégué) and Director of the Company that remained in force. Philippe Santi receives no compensation of any nature in connection with his appointment as an officer of the company.

(3) Compensation paid to Frédéric Garcia Pelayo as a salaried employee with the position of Chief International Officer under the termsof an employment contract predating his appointment as Executive Vice President (Directeur Général Délégué) and Director of the Companythat remained in force. Frédéric Garcia Pelayo receives no compensation of any nature in connection with his appointment as an officer of the company.

(4) Compensation paid to Catherine Bénard-Lotz as a salaried employee with the position of Chief Legal Officer under the terms of anemployment contract predating her appointment as Director of the Company that remained in force. Catherine Bénard-Lotz receives no compensation of any nature in connection with her appointment as a company director.

(5) Compensation paid to Jean Madar by the parent company of the Group, Inter Parfums Inc. (United States) as the Chief ExecutiveOfficer of this company. Jean Madar receives no compensation of any nature from Inter Parfums SA.


Directors’ fees for 2008

Directors’ fees are allocated to the Board of Directors by the shareholders’ meeting for fiscal 2008 for a set amountper meeting attended of €2,500. The sixth resolution of the ordinary shareholders’ meeting of April 25, 2008,set the total amount for directors’ fees at €60,000.

On this basis, for fiscal 2008 a total of €35,500 was paid to four outside directors for their attendance at meetings.The other directors expressly waived their rights to receive directors’ fees.

Directors’ fees in 2007 Directors’ fees in 2008

Philippe Benacin (Chairman) NA NAPhilippe Santi (Executive Vice President) NA NAMaurice Alhadève €10,000 €10,000 Marianne Benacin NA NACatherine Bénard-Lotz NA NAPatrick Choël €10,000 €10,000Michel Dyens €10,000 ¤ €7,500 Jean Levy €7,500 €7,500Raoul Madar NA NAJean Madar NA NA

NA: Not Applicable.

Stock options and other compensation

- Stock-options

Rules for the grant of stock options to officers are based on the level of responsibilities and the performance of the company’s share. The quantity of stock options granted to officers may vary from one year to anotheraccording to the performance of the company over this period.

- Benefits in-kind

Philippe Benacin received benefits in-kind for the costs of a company car and housing benefits representing a total amount of €70,800.

Frédéric Garcia-Pelayo received benefits in-kind for the costs of a company car for an amount of €5,130.

- Executive retirement plans

Executive officers benefit from a supplemental retirement plan in the form of a defined contribution annuity fund.The benefits of this plan were subsequently extended to senior executives of the company. This contribution to a private defined contribution pension fund is paid in part by the beneficiaries and in part by the employerfor an amount equal four times French Social Security ceiling. The annual contribution per beneficiary isapproximately €8,000. The supplemental retirement plan is part of the overall compensation policy adopted by the company for senior executives and managers.

- Other types of benefits

No executives benefit from forms of remuneration, indemnities or benefits owed or which could be owed resultingfrom the assumption, termination or change of functions of corporate officer of the company or subsequent to these events.



4.SPECIAL REPORT OF THE BOARD OF DIRECTORS ON STOCK OPTIONS

In compliance with article L.225-184 of the French Commercial Code, this report is produced by the Board of Directors to inform the combined shareholders’ meeting of April 24, 2009 of transactions carried out in fiscal2008 by virtue of the provisions under articles L.225-177 to L.225-186 of said code.

Options granted to and exercised by each corporate officer of the company in 2008, in connection the appointments they held.

No stock option plans were established in 2008 by Inter Parfums SA.No option was exercised in 2008 under the IP Inc. plans.

Number of shares Subscription Expirationgranted/exercised (1) price date

IP Inc. options granted during the period to officers (plan of February 14, 2008) (1)

Philippe Benacin 13,875 $11.30 02/14/2014Jean Madar 13,875 $11.30 02/14/2014Philippe Santi 12,750 $11.30 02/14/2014Frédéric Garcia-Pelayo 12,750 $11.30 02/14/2014Catherine Bénard-Lotz 4,725 $11.30 02/14/2014

IP Inc. options granted during the period to officers (plan of December 31, 2008)

Philippe Benacin 19,000 $6.93 12/31/2014Jean Madar 19,000 $6.93 12/31/2014

IPSA options exercised in the period by officers (2)

Philippe BenacinPlan of August 26, 2002 6,067 €9.20 08/26/2009Philippe SantiPlan of August 26, 2002 10,356 €9.20 08/26/2009

(1) Number and subscription price adjusted for the grant of new IP Inc. bonus shares (2 for 3) of May 30, 2008.(2) Number and subscription price adjusted for the grant of new bonus shares (1 for 10) of June 16, 2008.

Stock options granted to the 10 highest paid employees of the company that are not officers and exercisedby the 10 employees of the company had exercised the greatest number of options in 2008

Number of shares Subscription Expirationgranted/exercised (1) price date

Stock options granted to the 10 highest paid employees (1)

Plan of February 2008 (IP Inc.) 49,425 $11.30 02/14/2014

Options exercised by the 10 employees exercising the greatest number (2)

Plan of April 27, 2001 31,631 €17.50 04/26/2008Plan of August 26, 2002 8,598 €9.20 08/26/2009Plan of August 26, 2003 4,393 €15.10 08/26/2009Plan of March 25, 2004 1,862 €22.10 03/25/2010

Total 46,484 - -

(1) Number and subscription price adjusted for the grant of new IP Inc. bonus shares (2 for 3) of May 30, 2008.(2) Number and subscription price adjusted for the grant of new bonus shares (1 for 10) of June 16, 2008.

5.CHAIRMAN’S REPORT ONTHE WORK OF THE BOARDAND INTERNAL CONTROL

Pursuant to the provisions of paragraph 6, articleL.225-37, of the French Commercial Code theChairman of the Board of Directors hereby reportson the:

- terms and conditions governing the preparation andorganization of the Board’s work;

- internal control procedures implemented by thecompany;

- limitations that the may have been imposed on thepowers of the Chief Executive Officer by the Boardof Directors.

This report has been produced on the basis of workundertaken by the Finance and Corporate AffairsDepartment, with the different operating departmentsof the company and exchanges with the statutoryauditors in connection with internal audits conductedat the company’s initiative.

Concerning the corporate governance code, in compliancewith the law of July 3, 2008 introducing variousmeasures to be adopted by companies governed byCommunity law, this report also contains a presentationof corporate governance procedures relating to theAFEP/MEDEF code for listed companies of December2008, to which the company has decided to voluntarilyrefer. Provisions not applicable or that cannot beimplemented by the company are also specified inthis report.

This report was submitted for approval to the Boardof Directors on March 3, 2009.

5.1 Preparation and organization of the Board’s work

5.1.1 Composition and operation of the Board of Directors

Under the company’s bylaws, the Board of Directorsmay have three to eighteen members.

At December 31, 2008, corporate governance of the company was overseen by a Board that included 10 directors three of which qualified as independentdirectors. Detailed information on the compositionof the Board of Directors is disclosed in the registrationdocument (annual report) in the section on directorsand officers.

Directors are appointed for six-year terms whereasthe AFEP/MEDEF guidelines recommend maximumterms of four years. However, the Board considersthat this point does not constitute an obstacle togood corporate governance practices by the companyprovided that the Board ensures at the time of the

renewal and/or appointment of new directors abalanced composition of the board contributing to itseffectiveness and preserving the quality of proceedings.

The Board may meet as often as the interests of thecompany requires and at least five times a year at therequest of the Chairman and according to a calendarjointly established in the second half of the precedingyear. This calendar may be modified at the request of directors or when justified by unforeseen events.

The Chairman represents the Board of Directors. He organizes the work of the Board and reports onthis work to the general meeting. The work of the Boardis carried out in a collegial framework and in a mannerconsistent with the principles of ethical conduct incompliance with laws, regulations and recommendations.Accordingly, the Chairman of the Board of Directorsensures directors are provided with information inadvance and on a regular basis, that constitutes anessential condition for the performance of their duties.

The Board has not deemed it necessary to date to formspecial committees in part because of the nature of the organization of the company and its businessmodel, and in part because of the extensive in-depthexperience directors have in respect to the world ofbusiness and the international markets of competitors.This type of organization contributes to flexible decision-making processes.

In compliance with the new provisions of L.823-20of the French Commercial Code, the Board of Directorsdecided on March 3, 2009 not to create an independentaudit committee but rather to exercise the functionsof audit committee in plenary session on conditionthat this includes participation of independent directors.

Today, there exist no formal procedure for evaluatingthe Board’s operations and work. However an informalpractice has been adopted based on internal discussionsof the quality of the composition of the Board ofDirectors, directors’ compensation, the frequency of meetings and the transmission of information to Board members. The discussions have highlighteda favorable assessment concerning the Board of Directors’operating procedures and the need to maintain thefrequency of meetings devoted to discussions on strategicissues. To ensure the optimal performance of theBoard in a manner that complies with the principlesof good corporate governance, the Board is considering,in respect to the AFEP/MEDEF recommendations of December 2008, to undertake an initial evaluationon implementing a method for evaluating the operationsof the Board and the quality of its work.

5.1.2Powers and missions of the Board of Directors

In line with the option adopted by the Board of Directorson December 29, 2002, in light of the company’sstructure and the active participation of the founderin its development, the Board decided not to separatethe functions of Chairman of the Board of Directorswith that of Chief Executive Officer (Directeur Général).In consequence Philippe Benacin, who exercises the functions of Chairman of the Board of Directors,also serves as the Chief Executive Officer of the company.


As such he is vested with all powers in respect tothird parties to act under all circumstances in thename of the company and within the limitationsexpressly provided by law granted to Board of Directorsor shareholders meetings, and in compliance with the general and strategic orientations defined by theBoard of Directors. Decisions having a materialimpact on the scope of consolidation or that couldmaterially affect the company’s strategy must be submitted to the Board of Directors for approval.This limitation is stipulated in the Board Charter.

In compliance with article 15 of the bylaws, the Boardof Directors determines the strategic objectives of thecompany and ensures their implementation, withinthe scope of the corporate charter and subject tothose powers expressly granted by law to shareholders’meetings. It performs all controls and verifications it considers appropriate. Each director receives allinformation necessary to the performance of his orher duties and may request any documents considerednecessary.

In the period ended December 31, 2008, the Boardof Directors met eight times. The average rate ofattendance of directors was 69%. In general, meetingswere held at the company’s headquarters in Paris.

In the period under review, the Board of Directorsaddressed the following items of business:

- review of the parent company statutory and consolidated financial statements for the fiscal yearended December 31, 2007 and the interim financialstatements;

- review of the fiscal year 2008 budget and outlook

- authorizations concerning agreements in accordancewith L.225-38 et seq. of the French Commercial Code;

- analysis of financial information disclosed by thecompany to shareholders and the market;

- analysis of the major strategic, economic and financialpriorities of the company;

- review of external growth projects;

- adoption of the AFEP/MEDEF recommendationsof October 2008.

Auditors attend all Board of Directors’ meetings heldto consider the company’s accounts or any other mattersregarding which they may provide Board membersan informed opinion. Their participation in meetingsis requested by letter or any other means provided for under the bylaws.

5.1.3Charter of the Board of Directors

On March 3, 2009, the Board of Directors adopted a Board Charter defining the operating rules for the Board and the organization of its work to whichit is subject by virtue of provisions of the law and thecompany’s bylaws. The main provisions of this charterare as follows:

- the composition, role, organization and operatingprocedures of the Board;

- the functions of audit committee exercised by theBoard of Directors;

- the rules of conduct applicable to Board of Directors;

- compensation of directors;

- rules governing transactions involving the company’sshares in accordance with the provisions of the FrenchMonetary and Financial code and the AMF GeneralRegulation.

This Charter is destined to regularly evolve as newregulations and recommendations are introduced and in response to proposals by directors to ensurethe optimal effectiveness of the Board’s work.

5.1.4Transmission of information to directors

In accordance with the provisions of the bylaws,directors are provided with all relevant documentsand information to effectively perform their duties.Before each Board meeting, directors receive:

- a meeting agenda established by the Chairman in coordination with general management and, whenapplicable, directors proposing items to be discussed;

- an information file concerning issues to be addressedunder the agenda requiring particular analysis for the purpose of an informed discussion, during whichdirectors may ask relevant questions to ensure theiradequate understanding of the matters addressed;

- and, when useful, press releases that have beenpublished by the company as well as significant pressarticles and reports of financial analysts.

In addition to information provided in connectionwith Board meetings, directors are regularly providedwith all significant information concerning the company.They may request any explanation or the issuance of additional information, and in general, formulateany requests for access to information they mayconsider useful.

5.1.5Directors’ fees

Directors’ fees are allocated exclusively to outsideofficers of the Board of Directors. The total amountgranted by the general meeting is freely allocated by the Board of Directors.

The Board has decided to allocate this total amountto each director on the basis of their record of attendanceat Board meetings.

5.1.6Participation in shareholders meetings

Under the terms of article 19 of the company’sbylaws all shareholders have a right to participate in general meetings, personally or through a proxy,regardless of the number of shares they hold, uponsimple justification of their identity and ownership of the shares.



5.1.7 Disclosure of information provided for underarticle L.225-100-3 of the French Commercial Code

To the best of the company’s knowledge there existno items, and notably those relating to the structureof the share capital that could have a potential impactin the event of a public offering. The structure of theshare capital as well as the equity interest that have beenbrought to the company’s attention and any otherinformation relating thereto are described in chapters 3 and 8 of the section on shareholder information ofthis registration document. Similarly, rules concerningthe appointment and revocation of members of the Boardof Directors are subject to the rules of common law.

5.2 Internal control

5.2.1Internal control procedures

Definition

The company’s internal control procedures have in large part been based on the guidelines establishedby article 404 of the Sarbanes Oxley Act that appliesto the parent company because it is listed on a New YorkStock Exchange. The principles determined thereinare in part provided for under the AMF guidelines of January 2007 completed by the guidelines for smalland mid caps of January 9, 2008.

In consequence, in compliance with the both SOXand AMF guidelines, internal control constitutes a setof procedures defined and implemented by the companyunder its responsibility to ensure:

- compliance with laws and regulations;

- the application of instructions and priorities set by general management;

- the effective application of internal processes notablyconcerning the protection of corporate assets;

- the reliability of financial information.

This system covers all practices, procedures and actionsadapted to the specific references of the company which:

- contribute to the effective management of its activitiesand operations and the efficient use of resources, and;

- enable it to properly take into account de materialfinancial, operational or compliance risk.

In consequence, the company’s system of internalcontrol complies with the guidelines recommendedboth by the Sarbanes Oxley Act and the AMF. These cover the organization and principle of control,risk assessment processes, activities of control, formalization of control procedures, oversight of the internal control system.

The primary objective of internal control is to manageand prevent risks resulting from the activity of thecompany and risks of material errors or fraud, particularly in accounting and financial areas.

However, no system of internal control can providean absolute guarantee of achieving these objectives.

The probability of achieving such objectives is subjectto limits inherent in any system of internal control,related notably to uncertainties concerning the externalenvironment, the exercise of judgment or problemsthat may arise in response to human error or simpleerror, and the need to perform cost-benefit analysisbefore implementing any controls.

Components of the internal control system

The effectiveness of the procedures is based on thefollowing key factors:

- the responsibility of participants in preparing,implementing and ensuring the optimal managementof internal control procedures;

- establishing formalized procedures and compliancewith guidelines within the company;

- separation of line management functions fromcontrol functions.

The internal control organization and environment

To ensure the optimal management of the image ofits brands and the maximum degree of transparencyvis-à-vis customers in respect to its organization andto increase its performance, the company is organizedaround two major business divisions, one dedicatedexclusively to the Burberry brand, the BurberryFragrance Division, and the other to brands referredcollectively as the Luxe & Fashion Division, whoseoperations are supported by the resources and expertiseof the different functional and operating departmentsof the company. This organization is based on fiveoperating and functional departments:

- Production & Logistics;- Burberry Fragrances, Marketing & Export Sales;- Luxe & Fashion, Marketing & Export Sales;- French Sales;- Finance and Corporate Affairs.

Each of these departments contributes at its ownlevel of responsibility to achieving the objectives setby general management.

This organization has demonstrated its flexibility,strength and effectiveness based on achieving realsynergies with the operating and functional departments.It is also based on an objective to promote the convergenceof the resources of the different divisions involvedand the principle of a decentralized organizationcombining the advantages of flexibility and the delegationof responsibilities necessary for ensuring the optimaland coherent application of the strategic objectivesset by general management.

The internal control policy defined is adapted to thisorganizational model. The general architecture of thesystem is based on a clear separation of roles betweenpersons exercising operational functions and thosethat validate and control these functions.

On this basis, the system of internal control is organizedaround the following operating and functional activities,considered to have an impact on assets and/or results:

- key operating processes in the management of production, sales to distributors and the managementof the company image;


- processes and managing resources, and notably cashand currency hedges, human resources, committed fixedcosts and overhead, monitoring capital expendituresand tax obligations, monitoring the settlement oftrade receivables;- the processing and communication of accountingand financial information.

Risk management responsibilities are exercised atevery level of the company. For each departmentconcerned, the company has defined the missions,organization, contribution to critical decisions, criteriafor measuring their performance and their relationswith other departments. To this purpose, they mustpossess the knowledge and information necessary to establish, operate and oversee the internal controlprocedures in relation to the objectives that have beenset for them. An in-depth analysis of the separationof operational and control functions was undertakento address the objectives of control.

The efficiency of the organization is furthermore basedon a human resources policy that ensures profileseffectively match the corresponding responsibilities,while integrating the key values behind the company’ssuccess: prudence, pragmatism, responsiveness, highstandards, transparency and loyalty. Contributing to the expertise and know-how of a team of men andwomen sharing a common culture of commitment tointegrity and high standards that distinguish the companythus constitutes an important part of internal control.

Finally, awareness and understanding of the importanceof internal control are enhanced by the formalizing a number of internal procedures considered essentialfor effective operations of the company in a secureenvironment. To this purpose, a guide of internalprocedures has been produced detailing the mainoperating and financial processes covering notably sales/customers, sourcing/suppliers, inventory, IT systemsand personnel/payroll. This manual also providesdetailed information about procedures for expenserequests and bank accounts signature authorizations.In addition, the company has developed an informationtechnology charter for all personnel to ensure thatinformation technology resources are operated in a securityenvironment for the company’s computer network.

Key participants in internal control procedures

Along with all staff that contribute to the process of internal control, the following parties in particularactively contribute to its oversight and implementation:

- General Management

This includes the Chairman and Chief ExecutiveOfficer, assisted by two Executive Vice Presidents.They define the major strategic priorities to achievethe commercial and financial objectives of the company.This is done by providing clearly defined internalprocedures and an internal control system for whichthey are directly responsible. They define the generalprinciples and ensure the implementation of the different components of internal control.

- The Board of Directors

In connection with information provided to the Board,its members review all the main characteristics of the

internal control procedures and system. The Boardmay exercise its authority to request verifications and controls it considers appropriate to ensure thetransparency, effectiveness and security of the internalcontrol environment.

- The Finance Department

The Finance Department exercises responsibility overcash management, management control, consolidationand accounting, legal affairs, human resources, audit and internal control, financial communicationsand investor relations, as well as IT activities. Theresponsibilities are exercised and/or delegated in sucha manner that each of the areas concerned assure the consistency of financial and accounting data inconnection with the following tasks:

- preparing and monitoring accounting and financialinformation;

- producing statutory and consolidated interim andannual financial statements of the Group in compliancewith market standards and applicable regulations;

- the budget process and forecasts and the implementationof monthly management reporting procedures andanalysis of variances between actual results and budget;

- producing financial communications information;

- implementing and monitoring accounting andmanagement procedures and guidelines;

- overseeing accounting and management informationsystems;

- management of uncollected trade receivables;

- control of disbursements and use of bank authorizations.

The Finance Department also supports operatingdepartments and management by establishing operatingprocedures, defining and promoting the use of tools,procedures and good practices essential for applicationby the latter of the objectives defined by GeneralManagement.

Identifying, evaluating, managing and managing monitoring risks

The sustainable development of the company’s businessand the achievement of its objectives depends on an effectiveunderstanding of the risks. For this reason, the companyhas launched a process of mapping general risks, establishinga hierarchy of the main risks to which it considers it isexposed, according to their seriousness, probability, frequencyand degree of control. These risks are presented in chapter 3of the management report. This process highlighted measures to be implemented to limit the likelihood of theoccurrence of such risks as well as their consequences.

Since 2004, the company has applied a risk mappingapproach, followed by the implementation of a self-assessment of internal procedures to strengthen theunderstanding and the adoption of internal controlprocesses in force. This regular review of risks makes it possible to measure progress in implementing programmed actions, changes since the previous assessment of risks and take into account new risksthat may be identified through this process.

This process of self-evaluation is undertaken annuallywith the assistance of a well-known outside independentaudit firm. This involves identifying key assets of thecompany, analyzing potential risks, existing or emerging,by type of task assigned to each department concernedand meetings with the operating departments concerned.

The audit consists of conducting a general overview of the organization of internal control to obtain a description of the internal control system by sendingmanagers a sample of tasks selected according to thedegree of risk they generate for the company whenthey have an impact on the company’s financial statements. The company produces a self-assessmentquestionnaire to measure the application of internalcontrols on the basis of voluntary statements. If processesand the associated controls are not formalized or areconsidered insufficient a remediation plan is implementedby the manager concerned to complete the existingsystem of internal controls.

Implementation of this audit plan is carried out underthe responsibility of the Finance Department and coversthe following key processes:

- purchasing/management of trade payables: this processis formalized by procedures based, on the one hand,on the separation of the functions for placing ordersand for authorizing orders, acceptance, the recordingof the transactions in the accounts and payment ofsuppliers, and on the other hand a process of monitoringand reconciling purchase orders, receiving slips invoices(quantity, price, terms of payment) supplemented by a procedure for preventing dual recognition/paymentof supplier invoices. Eventually anomalies are analyzedand monitored;

- sales/trade receivables management/collection: thisprocess ensures that all deliveries made and/or servicesrendered are invoiced within the specified period andinvoices are properly recorded in the trade receivablesaccounts. It also determines procedures for issuing credits which must be justified and controlled beforebeing booked. This process in addition contributes to properly identifying doubtful trade receivables and anticipating risks of default;

- payment of royalties to licensors: this process involvesdetailed analysis of methods for processing informationfor sales representing a component for the calculationof these royalties in order to prevent errors that couldcompromise the reliability of the financial informationof the company;

- cash management: this evaluation makes it possibleto ensure that bank accounts are reconciled on a regularbasis with information received from the banks and reviewed periodically in order to document thereconciliations and explain eventual variances;

- preparing financial and accounting information: the review of the fair presentation and consistency of account closing procedures to ensure a reliableconsolidation consistent with data collected and submittedto the Finance Department;

- information systems management: this process ensuresthe development and maintenance of computer applications and the network, the logical and physical

security of the information system, including a backupplan to guarantee continuity and the resumption ofactivity in the event of an incident.

On completion of this self-assessment process, the FinanceDepartment transmits the results of this work to thedifferent departments concerned and reports to GeneralManagement to which it provides an executive summaryalong with a detailed report indicating control issuesand highlighting eventual dysfunctions or potentialdysfunctions that could result from inadequate controls.This report is accompanied by a plan of recommendedactions to correct the dysfunctions identified within a reasonable timeframe.

The test of internal control procedures conducted in2008 resulted in the performance of 72 controls focusingon 65 areas of risk covering the following processes:

Number of controls

Sales 12Purchasing 9Inventory 7Royalties 4Marketing/Advertising 2Payroll 6Taxes and equivalent 6Fixed assets 5Cash management 7Information systems 6Account cut-off processes 8

5.2.2Internal control procedures relating to accounting and financial information

Accounting and financial controls are destined to ensure:

- compliance with accounting regulations and thecorrect application of account cut-all processes;

- application of instructions and guidelines set byGeneral Management relating to this information;

- the quality of information provided to preparepublished financial statements and their reliabilitybefore their publication;

- effective management of risks of error, fraud andirregularities in financial statements.

Process of managing the accounting and financial organization

- Functional organization

Internal control procedures applicable to accountingand financial data are prepared in implemented underthe responsibility of the Finance Department and theoversight of General Management in the followingareas: financial communications, accounting, consolidation, management control, cash managementand information systems.

- Relations with statutory auditors

In connection with the half yearly and annual closingsof the accounts, the statutory auditors organizedtheir work by undertaking:

- a prior review of procedures and internal control tests;


- a meeting prior to the approval of the accounts to define the program of reviews and the calendarand organization of their work;

- an audit of the financial statements prepared by the Finance Department;

- a meeting presenting a summary of their work to General Management.

On the basis of this organization and mission, thestatutory auditors certify the fair presentation of theconsolidated and parent company financial statements.

- Application of accounting standards

The accounting department has a process for identifyingand processing changes in accounting standards andthe approval of the resulting procedures for accountingtreatment. Similarly, there exist procedures to ensurethe accounting department is informed of changes in commercial practices and financial transactions ofan exceptional nature that could affect the methodologyor procedures for recording transactions. The scopeof accounting management is constantly updated.

- Organization and security of information systems

The company uses an ERP application that integratessales management, financial accounting, subsidiaryaccounts and cost accounting capabilities. The organization and operating of the entire information are subject to measures that limit theconditions of access to the system, the validation of processing and closing procedures, conservation of data, and verification of entries. Accordingly, inorder to ensure continuity in processing of accountingdata systems of, backup systems and a continuityplan have been implemented in the event of a suddendysfunction in order to provide immediate backup.In addition, all data is backed up daily and a copykept in a secure location. In terms of conservationand protection of data, a procedure for secure accessto accounting and financial data has been developedinvolving the designation of individual and personalrights assigned to specific persons accompanied by passwords.

Preparing accounting and financial information

- Operating process for producing the accountinginformation

Processes in the early phase of accounting productionare based on procedures rules for validation, authorizationand recognition. Accordingly, to ensure the qualityand consistency of accounting information, at everyoperational level, reconciliations are performed on aperiodic basis between the management data necessaryto produce published accounting and financial information and the corresponding internal accountingdata as follows:

- Marketing & Creation: comparing the budget withactual in relation to expenses associated with designand creation costs and advertising campaigns (Franceand Export);

- Production & Logistics: ensuring the effectivemanagement of production costs as approved byGeneral Management and that quantities of components

ordered are in line with those used in production and the monitoring of inventories of componentsand finished products;

- Export & France: monitoring sales activity, thecontribution to the company for advertising expensesby distributors and the corresponding margins;

- Finance Department: calculating provisions foradvertising costs, royalties and fees and the control of subsidiaries in terms of reporting and budgets.

Meetings are organized to coordinate activity withthe different departments concerned in order toensure the exhaustive nature of information providedto prepare the accounts.

- Process for account closings and the production of consolidated financial statements

Account cut-off procedures are subject to precise instructions in respect to the closing process, indicatinginformation to be entered, restatements required, the timetable of activity as well as the planning forprecise tasks for each party participating this process.The procedure for producing financial data for theconsolidated balance sheet and income statementfalls under the framework of IFRS.

Validation procedures are adopted for verificationsconcerning the following tasks:

- the proper application of accounting standards and principles;

- consistency management and accounting information;

- consistency between information on statutory andconsolidated accounts;

- validation of the debt equity of the group;

- the exhaustive nature of information concerningdeferred taxes including possible tax loss carryforwards;

- the valuation of financial instruments and in particular foreign-exchange hedges;

- estimates of the fair value of intangible fixed assetsthrough annual impairment tests.

- Financial communications

The Finance Department, in coordination with the General Management, prepares the financialcommunications plan on the basis of all consistentinformation necessary to clearly present the company’sthe strategy, performances and outlook.

The financial communications process is subject to a clearly defined reporting schedule for informationdestined for financial markets and market authorities.This calendar ensures that communications complieswith the requirements of applicable laws and regulationsrelating to financial disclosures both concerning the nature of information to be disclosed, the requireddeadlines, compliant with the principle of equal accessto information by all shareholders.

5.2.3 Forecasted trends for 2009

The company assures permanent oversight of organizational changes to anticipate, adapt and optimize


internal control procedures in real time. Its internalcontrol procedures are also designed to respond toboth regulatory requirements and future issues facingthe company.

In early 2009, the company reinforced procedures for monitoring trade receivables and cash positions of the European distribution subsidiaries. These consistof monthly analysis of the aged trial balance for tradereceivables by the Credit Manager for the purpose of identifying actions to be taken by local financedepartments. A daily ledger of bank account activityfor these structures will also be maintained to optimizemanagement (daily and forecasted) of Group cash.

To ensure the company is able to continue to operatein the event of an unanticipated event, a businesscontinuity plan will be implemented in 2009, underthe responsibility of the Information Technologydepartment. This plan will consist in the virtualizationof servers and maintaining computer applications locatedat two distinct servers. This plan will improve thecomputer performances, take into account ecologicalconcerns by reducing energy and implement a faulttolerance system to restore normal operations in a fewminutes.

In line with this approach of regularly strengtheningits internal control system, the company will continueto set new priorities with the following objectives:

- ensuring continuous improvement in the formalizationof procedures;

- reinforcing the degree of controls for operating anadministrative entities in connection with the applicationof remediation plans;

- extending tests to new internal control processes;

- the quality and fair presentation of financial information, rigorous and effective management of majorrisk regulatory requirements.


60 Two thousand eight registration document Inter Parfums. Shareholder information

CHAPTER FOUR

ShareholderinformationStatutory information 61

Capital stock 63

Resolutions submitted to the combined shareholders’ meeting of April 24, 2009 66

1.STATUTORY INFORMATION

1.The company

1.1General information

Corporate name: Inter Parfums

Registered office: 4, rond-point des Champs Elysées 75008 Paris, FranceDate of incorporation: April 5, 1989Date of expiration: April 5, 2088

Legal form: Corporation (société anonyme) with a Board of Directors governed by the provisions of Livre II of the French Commercial Code andCompanies Act No. 67-236 of March 23, 1967.

Corporate charter: The company’s business purposein France and all other countries includes:

- the purchase, sale, manufacture, import and exportof all products related to perfumes and cosmetics;

- the use of license agreements;

- providing all services related to the above-mentionedactivities;

- the company’s participation by all means, directlyor indirectly, in all transactions that may relate to itsbusiness purpose through the creation of new companies,the contribution, subscription or purchase of companyshares or rights, mergers or other, through the creation,acquisition, rental or lease management of all rightsto conduct business or establishments, and throughthe acquisition, operation or disposal of all proceduresand patents related to these activities;

- and, generally, all commercial, industrial, financial,civil, securities and real estate transactions that relatedirectly or indirectly to the company’s business purposeor to any similar and related activities.

Fiscal year: January 1 - December 31Siret number: 350 219 382 00032Activity code: 46.45 Z Wholesale perfume and beauty products.

1.2Share account registration

At the option of their owners, shares in France areregistered in a standard personal account (comptenominatif pur), an administered personal account(compte nominatif administré) or to the bearer identifiable at an authorized intermediary. EuroEmetteurs Finances handles share services and management exclusively for personal accounts.Questions may be addressed to the registered office.

2.Main legal provisions and bylaws

2.1Shareholders’ meetings (article 19 of the bylaws)

All shareholders have the right to participate in shareholders’ meetings or to be represented, regardlessof the number of shares owned, provided the sharesare fully paid up and registered in the shareholder’sname for at least five days prior to the shareholders’meeting or presentation of a certificate filed by anapproved intermediary at the sites mentioned in theMeeting notice confirming that the shares are notavailable up until the date of the Meeting.

All shareholders may be represented by a spouse or another shareholder. All shareholders may vote by correspondence using a proxy statement that complieswith legal provisions and is obtainable by returningthe Meeting notice.

2.2Special shareholder disclosure obligations (article 20 of the bylaws)

In accordance with the provisions of L.233-7 of theFrench Commercial Code, all shareholders, naturalpersons or legal entities, acting alone or in concert,who cross thresholds in either direction in respect to the number of shares owed representing more thanone twentieth, one tenth, three twentieths, one fifth,one quarter, one third, one half, two thirds, eighteentwentieths or nineteen twentieths of the capital orvoting rights; must notify the company by certifiedmail with return receipt of the number of shares andvoting rights within five trading days. If this requirement

61Two thousand eight registration document Inter Parfums. Shareholder information

is not met, the provisions of article L.233-14 of theFrench Commercial Code shall apply.

Under article L.233-7 subsection VII of the FrenchCommercial Code, said shareholders must also statetheir intentions with regard to share ownership forthe next 12 months whenever the thresholds of onetenth or one fifth of the capital or voting rights havebeen crossed.

2.3Appropriation and distribution of earnings(article 24 of the bylaws)

If the financial statements approved by the shareholders’meeting show a distributable profit as defined by law,the shareholders’ meeting decides whether to makeappropriations to one or more retained earnings orreserve accounts under its control, to carry it forwardor to distribute it. The shareholders’ meeting maygrant shareholders the choice of receiving a dividendin cash or in shares for all or part of the dividend or interim dividends to be distributed, subject to theapplicable legal provisions.

Following the approval of the financial statements by the shareholders, any losses that should occur are

carried forward to be offset against future earningsuntil these losses have been fully utilized.

2.4Double voting rights (article 11 of the bylaws)

In accordance with the provisions of article L.225-123of the French Commercial Code, the extraordinaryshareholders’ meeting of September 29, 1995 createdshares with double voting rights. These shares must be fully paid-up and recorded in the company’s shareregister as registered shares for at least three years.

2.5Documents on display

The bylaws, minutes and other company documentsare available at Inter Parfums’ registered office.

2.6Legal jurisdiction

In the event of litigation, the courts having jurisdictionare those of the registered office in cases where the company is a defendant. They are designatedaccording to the nature of the litigation, barring anycontrary provisions of the new Civil Procedure Code.


2.CAPITAL STOCK

1.Five-year history of capital stock transactions

Year Transaction type Number Shares Total Capital stockof shares created shares (in euros)

2004 Exercise of 1997 stock options 4,039 4,039 4,276,237 12,828,711Exercise of 1998 stock options 41,297 41,297 4,317,534 12,952,602Exercise of 1999 stock options 127,017 127,017 4,444,551 13,333,653Bonus issue 4,282,535 4,282,535 8,727,086 26,181,258

2005 Exercise of 1998 stock options 11,402 11,402 8,738,488 26,215,464Exercise of 1999 stock options 29,590 29,590 8,768,078 26,304,234Exercise of 2000 stock options 57,118 57,118 8,825,196 26,475,588Exercise of 2001 stock options 33,575 33,575 8,858,771 26,576,313Bonus issue 875,888 875,888 9,734,659 29,203,977

2006 Exercise of 1999 stock options 28,758 28,758 9,763,417 29,290,251Exercise of 2000 stock options 39,559 39,559 9,802,976 29,408,928Exercise of 2001 stock options 43,795 43,795 9,846,771 29,540,313Exercise of 2002 stock options 55,486 55,486 9,902,257 29,706,771Exercise of 2003 stock options 484 484 9,902,741 29,708,223Exercise of 2004 stock options 704 704 9,903,445 29,710,335Exercise of 2005 stock options 363 363 9,903,808 29,711,424Exercise of 2006 stock options 330 330 9,904,138 29,712,414Bonus issue 976,942 976,942 10,881,080 32,643,240

2007 Exercise of 2000 stock options 33,028 33,028 10,914,108 32,742,324Exercise of 2001 stock options 29,039 29,039 10,943,147 32,829,441Exercise of 2002 stock options 22,878 22,878 10,966,025 32,898,075Exercise of 2003 stock options 7,809 7,809 10,973,834 32,921,502Exercise of 2004 stock options 4,429 4,429 10,978,263 32,934,789Exercise of 2005 stock options 24,563 24,563 11,002,826 33,008,478Bonus issue 1,097,541 1,097,541 12,100,367 36,301,101

2008 Exercise of 2001 stock options 39,857 39,857 12,140,224 36,420,672Exercise of 2002 stock options 26,638 26,638 12,166,862 36,500,586Exercise of 2003 stock options 8,711 8,711 12,175,573 36,526,719Exercise of 2004 stock options 1,862 1,862 12,177,435 36,532,305Bonus issue 1,214,545 1,214,545 13,391,980 40,175,940

As of December 31, 2008, Inter Parfums’ capital was composed of 13,391,980 shares with a par value of €3.

2.Authorized capital

2.1Previous authorizations

The shareholders’ meeting of April 20, 2007 authorizedthe Board of Directors to increase the capital stockby issuing ordinary shares with or without shareholders’preemptive rights for maximum nominal amountsrespectively of €5 million. These authorizations weregranted for 26 months from the date of the shareholders’meeting of April 20, 2007, replacing the authorizationspreviously granted by the shareholders’ meeting of April 22, 2005 with the same purpose. To date,the Board of Directors has not made use of theseauthorizations.

This shareholders’ meeting also authorized the Boardof Directors to increase the capital by an amount

not exceeding €15 million through the capitalizationof earnings, addition paid-in capital and reserves. The Board of Directors made use of this authorization:

- pursuant to its decisions of May 25, 2008 and June 15,2007 to increase the capital stock by €3,292,623through the creation of 1,097,541 bonus shares onthe basis of one new share for every ten shares held;

- pursuant to its decisions of May 21, 2008 and June 13,2008 to increase the capital stock by €3,643,635through the creation of 1,214,545 bonus shares onthe basis of one new share for every ten shares held.

The maximum amount of present or future capitalincreases that may result from all issuances authorizedby the shareholders’ meeting of April 20, 2008 is€25,500,000 that includes the €500,000 authorizedin connection with the capital increase reserved foremployees proposed in the resolution that was rejectedby this meeting.


2.2New authorizations

The eleventh resolution submitted to the combinedshareholders’ meeting of April 24, 2009 proposes thatthe Board of Directors authorizes a capital increasethrough the capitalization of earnings, reserves andadditional paid in capital subject to a maximumamount of €20,000,000.

The twelfth and thirteen resolutions submitted to the shareholders’ meeting provide for the grant ofnew authorities to the Board of Directors to increasethe capital stock by issuing ordinary shares, maintainingthe preemptive rights of existing shareholders and a second entailing the waiver of preemptive rights for maximum nominal amounts of €10,000,000 respectively. In connection with these authorizations,

it is proposed that shareholders authorize the Boardof Directors by the fourteenth resolution to increasethe number of shares in the event of excess demandpursuant to these rights issues. These authorizationswould be granted for 26 months from the date ofshareholders meeting of April 24, 2009, replacingand superseding the authorizations previously grantedby the shareholders meeting of April 20, 2007 for the same purpose.

The maximum amount of present or future capitalincreases that may result from the total amount of these share issues subject to the approval of theshareholders meeting of April 24, 2009 would representa total nominal amount of €40,500,000 that wouldinclude the amount of €500,000 in connection withthe capital increase reserved for employees describedin the sixteenth resolution submitted to shareholders.

A survey of shareholder ownership identified 5,550shareholders at February 28, 2009. Excluding InterParfums Holding, ownership breaks down as follows:

- 100 French investors and mutual funds owning10.5% of the capital stock compared with 120 in2007 owning 10.7%;

- 75 foreign investors, located mainly in the U.K.,Switzerland, the U.S. and Luxembourg, who own

7.0% of the capital stock compared with 50 in 2007with 5.3%;

- 5,375 individuals owning 7.0% of the capital stockcompared with 5,890 in 2007 owning 8.6%.

To the Company’s knowledge, there are no othershareholders that possess directly, indirectly or together,5% or more of the capital or voting rights.

2.3Breakdown of option holders as of December 31, 2008

Plan 02 Plan 03 Plan 04 Plan 05 Plan 06

Management committee members 7,331 29,283 43,342 36,752 38,333Employees 35,788 54,030 85,575 93,913 89,742

Total 43,119 83,313 128,917 130,665 128,075

3.Ownership of Inter Parfums capital stock and voting rights

3.1Situation at February 28, 2009

Shares % of Voting % of votingheld capital rights rights

Inter Parfums Holding SA 10,056,891 75.08% 19,470,598 85.47%French investors 1,407,173 10.51% 1,407,173 6.18%Foreign investors 940,878 7.02% 940,878 4.13%Individuals 941,506 7.03% 960,947 4.22%Treasury shares 47,466 0.36% -

Total 13,393,914 100.00% 22,779,596 100.00%


3.2Changes in Inter Parfums Holding’s ownership over four years

At 31 December 2005 2006 2007 2008

Inter Parfums Holding 72.71% 71.56% 72.02% 75.32%Free float and employees 27.29% 28.44% 27.98% 24.68%

Total 100.00% 100.00% 100.00% 100.00%

4.Breakdown of Inter Parfums Holding’s capital stock as of December 31, 2008Inter Parfums Holding, whose sole equity holding is Inter Parfums, is itself wholly owned by Inter Parfums Inc.,listed on NASDAQ in the United States with approximately 1,300 shareholders. As of December 31, 2008it had the following ownership structure:- Philippe Benacin and Jean Madar: 51.50%;- Free float: 48.50%.

5.DividendSince 1998, the company has adopted a policy of distributing dividends that today represents approximately 25%of consolidated earnings, destined to reward shareholders while at the same time associating them with the Group’sexpansion. In early May 2008, a dividend of €0.38 per share was paid or a total amount of €4.6 million.

6.Shareholders’ agreementsNo shareholders’ agreements exist at the level of Inter Parfums Holding.

7.Special shareholder disclosure obligations In compliance with article L.233-7 of the French Commercial Code, all shareholders acquiring a number of shares that increases above or below certain statutory reporting thresholds are required to notify the FrenchFinancial Market Authority (Autorité des Marchés Financiers). If such modifications are not made in accordancewith the applicable legal provisions, the company will apply the provisions of article L.233-14 relating to the cancellation of voting rights. In 2008, the company was not informed of any changes in share ownershipinvolving the crossing of these statutory thresholds.

8.Key stock market dataIn number of shares and euros 2004 2005 2006 2007 2008

Shares outstanding as of December 31 8,727,086 9,734,659 10,881,080 12,100,367 13,391,980Market capitalization as of December 31 €233 M €334 M €386 M €380 M €242 MHigh (1) 67.30 35.10 41.88 38.00 31.55Low (1) 25.15 26.65 31.52 25.82 17.00Average (1) 29.12 31.20 35.25 34.04 23.63Year-end (1) 26.79 34.29 35.43 31.32 18.05Average daily volume (1) 4,570 8,093 7,785 11,204 6,220Earnings per share (1) 3.00 1.82 1.79 1.76 1.66Dividend per share (1) 0.37 0.37 0.38 0.38 0.38Average number of shares outstanding 5,174,465 8,968,569 10,421,965 11,480,164 12,719,676

(1) Historical data (not restated for bonus share issues undertaken each year).

9.Share priceIn an environment of highly volatile equity markets, the Inter Parfums share showed resilience throughout the 2008 first half, declining 18% compared to a downturn of more than 25% for the CAC Small 90 benchmarkfor mid caps.

In September 2008, marked by the downturn in all financial markets, this trend continued despite the publicationof good half year performances and on October 27, 2008, the share retreated to its low of the year of €17.

The publication of third-quarter sales and the 2009 outlook failed to reverse this trend and the share endedthe year at €18.05.

For the full year, the share declined 37% in consequence compared with more than 50% for the CAC Small90 benchmark.


3.RESOLUTIONS SUBMITTEDTO THE COMBINED SHAREHOLDERS’ MEETINGOF APRIL 24, 2009

Ordinary resolutions

First resolution

Review and approval of the parent company financialstatements for the period ended December 31, 2008and the grant of discharge to Directors

The shareholders, in accordance with the conditionsof quorum and majority that apply at ordinary generalmeetings, after reviewing the Board of Directors’ reportand the Auditors’ report on the financial statements for the period ended December 31, 2008, approvethe annual financial statements, as presented showinga net income of €20,611,635. They also approve thetransaction described in the accounts and summarizedin these reports.

They furthermore approve the total amount of disalloweddeductions under article 39-4 of the French GeneralTax Code of €59,567 for 2008.

The shareholders consequently grant discharge forthe period ended December 31, 2008 to all directorsfor their management.

Second resolution

Review and approval of the consolidated financialstatements for the period ended December 31, 2008

The shareholders, in accordance with the conditionsof quorum and majority that apply at ordinary generalmeetings, after reviewing the report of the Board ofDirectors and the Auditors’ report on the consolidatedfinancial statements of the Group for the period ended December 31, 2008, approve the financial statements as presented showing an IFRS net incomeof €21,119,000. They also approve the transactionsdescribed in the accounts and summarized in these reports.

Third resolution

Internal control and corporate governance - Report of the Chairman and the auditors

The shareholders duly note the presentation of theChairman’ report on the conditions of preparationand organization of the work of the Board of Directorsand internal control and risk management proceduresimplemented by the company, prepared in compliancewith the provisions of articles L.225-37, subsection 6 andL.225-68 subsection 7 of the French Commercial Code.

Fourth resolution

Approval of the appropriation of net income

The shareholders, in accordance with the conditionsof quorum and majority that apply at ordinary generalmeetings, approving the proposal Board of Directors,decide to appropriate net income of the period of€20,611,635 as follows:

Net income of the period in euros ¤20,611,635

Appropriation to the legal reserve ¤387,484Retained earnings ¤15,150,541Dividend (1) ¤5,073,610

Total appropriation ¤20,611,635(1) According to a price of €0.38 per share, and taking into accountthe number of treasury shares held at December 31, 2008 that willbe adjusted on the on the basis of the actual price on the dividendpayment date and stock options exercised by beneficiaries.

Shareholders accordingly set, for all qualifying sharescomprising the capital stock a dividend of €0.38 pershare. This amount shall be allocated among shareholderseligible for the full amount to the 40% tax allowanceprovided for under article 158.3.2 of the FrenchGeneral Tax Code for qualifying shareholders, exceptwhere the fixed 18% withholding tax is applied in accordance with article 117 quater of this Code.

The dividend payment date is April 30, 2009.

If on the dividend payment date the company holdstreasury shares, the amount corresponding to dividendsnot distributed for said shares will be allocated toretained earnings:

As required by law the shareholders duly note thatdividends for the last three periods were as follows:

Year Number Dividend Tax Totalof shares allowance distribution

2007 12,100,367 €0.38 40% €0.23 2006 10,881,080 €0.38 40% €0.23 2005 9,734,659 €0.37 40% €0.22

Fifth resolution

Approval of regulated agreements under articles L.225-38 et seq. of the French Commercial Code

The shareholders, in accordance with the conditionsof quorum and majority that apply at ordinary generalmeetings and after reviewing the Auditors’ specialreport on related-party agreements governed by articlesL.225-38 et seq. of the French Commercial Code,approve each of these agreements described in this report.

Sixth resolution

Ratification of the provisional appointment of a director by the Board of Directors

The shareholders, in accordance with the conditionsof quorum and majority that apply at ordinary generalmeetings, ratify the appointment as director of Mrs. Chantal Roos, as a provisional measure by theBoard of Directors on November 22, 2008, to replaceMrs. Marianne Benacin.


In consequence, Mrs. Chantal Roos shall serve as director for the remainder of her predecessor’sappointment, i.e. until the close of the general meetingcalled to approve the financial statements for the periodending December 31, 2009.

Seventh resolution

Ratification of the provisional appointment of a Director by the Board of Directors

The shareholders, in accordance with the conditionsof quorum and majority that apply at ordinary generalmeetings, ratify the appointment as director of Mr. Frédéric Garcia-Pelayo, as a provisional measureby the Board of Directors of November 22, 2008, to replace Mr. Raoul Madar.

In consequence, Mr. Frédéric Garcia-Pelayo shallserve as director for remainder of his predecessor’sappointment, i.e. until the close of the general meetingcalled to approve the financial statements for the periodending December 31, 2009.

Eighth resolution

Setting of directors’ fees

The shareholders, in accordance with the conditionsof quorum and majority applicable to ordinary generalmeetings, after having reviewed the Board of Directors’report, set annual directors fees for the year in progressat €60,000 and grant full power to the Board ofDirectors to determine the criteria for allocatingthese fees among board members within the limit of this amount and the date of their payment.

Ninth resolution

Renewal of the authorization for the company to purchase and sell its own shares on the marketwithin the framework of article L.225-209 of the French Commercial Code

The shareholders, in accordance with the conditionsof quorum and majority that apply at ordinary meetingsand after reviewing the report of the Board of Directorsand in accordance with the provisions of article L.225-209 of the French Commercial Code et seq.and the provisions of articles 241-1 to 241-6 of the AMFGeneral Regulation, grant the Board of Directors the authority, which it may further delegate, to acquireshares of the company, according to the terms andconditions set forth below.

The purpose of this authorization is to permit thecompany to purchase and sell its own shares for usesprovided for by law. On this basis, the shareholdersdecide that this share repurchase program may be usedfor the following purposes:

- maintain an orderly market in the company’s sharesthrough an investment services provider within theframework of a liquidity agreement in compliancewith the conduct of business rules of the French association of investment firms (AFEI);

- grant employees or officers of the company and/orthe Group stock options (articles L.225-177 et seq.of the French Commercial Code) and/or bonus shares

(articles L.225-197-1 et seq. of the FrenchCommercial Code);

- remittance of shares pursuant to the exercise of rightsattached to securities conferring rights by redemption,conversion, exchange, presentation of warrants or anyother means to grants of the company’s shares;

- use such shares for payment or exchange in connectionwith financial transactions or acquisitions in compliancewith the financial market regulations;

- cancel shares to increase the return on equity andearnings per share and/or eliminate the impact of dilutionfor shareholders from capital increases subject to adoptionof the seventeenth resolution of this extraordinarygeneral meeting authorizing this cancellation;

- permit the company to buy and sell its own sharesfor any other authorized purpose or practice admittedby the market or which may be subsequently authorizedor admitted by applicable laws and regulations.

Shares acquired shall be subject to the followinglimits:

- the maximum purchase price is €45 per share,excluding execution costs;

- the total number of shares acquired may not exceed5% of the capital stock outstanding. This 5% limitapplies to an amount of capital that will be adjustedas applicable for corporate actions affecting the capitalstock after this meeting, whereby acquisitions by the company shall under no circumstances increaseits holding, directly and indirectly through subsidiaries,to more than 5% of the capital stock;

- pursuant to the above, and by way of indicationwithout taking into account shares already held bythe company, 13,351,605 shares held by the companyat December 31, 2008 would represent 5% of thecapital stock corresponding to a maximum theoreticalpurchase price of €30,041,000.

The Board of Directors may adjust the above-mentionedprices pursuant to modifications in the par value ofthe share, the capitalization of retained earnings andbonus issues, stock splits or reverse splits, repaymentor reduction of capital, distribution of retained earningsor other assets and any other transactions involvingthe company’s capital stock, to reflect the impact of these transactions on the share’s value.

In accordance with applicable regulations, said sharesmay be purchased, held, sold or transferred, accordingto the case, through one or more transactions, at anytime the Board of Directors so chooses including whentender offers are in effect subject to applicable regulations,by any means, on or off market, and notably throughblock trades.

Shares held by the Company must, in compliancewith the law, be maintained in registered form. In addition said shares that will not confer preemptiverights or entitlement to dividends shall be deprivedof voting rights.

The shareholders grant all powers to the Board ofDirectors that may in turn delegate such authority to:


- place all stock orders on or off the market;

- sign any agreements notably with a view to maintainingregisters of purchases and sales;

- submit all declarations to the Autorité des MarchésFinanciers (AMF) or any other such entity, carry outall formalities and, in general, make all necessaryarrangements.

The shareholders decide that this authorization:

- shall take effect from the date of the Board ofDirectors’ meeting that decides to implement thisdecision that will automatically result in the expirationof the previous authorization granted under the seventhresolution of the shareholders’ meeting of April 25, 2008;

- will expire after a period of 18 months from the dateof this meeting.

The Board of Directors will notify the general meetingof all transactions carried out under this resolution.

Tenth resolution

Powers

All powers are granted to the bearer of copies or extractsof the minutes of this shareholders’ meeting ruling inaccordance with the conditions of quorum and majoritythat apply at ordinary general meetings to performall legal formalities relating to the above resolutions.

Extraordinary resolutions

Eleventh resolution

Authority granted to the Board of Directors to issueshares through the capitalization of additional paid-incapital, reserves or profit

The extraordinary shareholders’ meeting, in accordancewith the conditions of quorum and majority applicableto ordinary shareholders meetings, after having reviewedthe Board of Directors’ report and ruling in accordancewith the provisions of articles L.225-129 - L.225-129-6and L.225-130 of the French Commercial Code, grantsauthority to the said Board to increase the capital, in one or more transactions, by an amount not to exceed€20 million through the successive or simultaneouscapitalization of all or part of the additional paid-incapital, reserves or profits. This capital increase maybe carried out by the creation and allotment of bonusshares or, when applicable, by a combination of thesetwo methods.

The shareholders decide that the rights resulting fromfractional amounts shall not be negotiable and thatthe corresponding shares will be sold with the proceedsfrom such sale to be allocated to holders of rights nolater than 30 days after the registration in their nameof the whole number of shares allotted to them.

The shareholders grant full authority to the Board of Directors, which the latter may further delegate asprovided for by law, for the purpose of implementingthis resolution and notably to:

- determine the procedures and conditions for transactions thus authorized, and notably the amount

and nature of reserves and additional paid in capital,the number of new shares to be issued or the amountby which the nominal value of existing shares comprisingthe capital stock will be increased, establish the dateof record as of which new shares will carry rights or the date from which the increase in the nominalvalue will take effect;

- perform all formalities to record the completion ofthe capital increase and amend the bylaws in consequenceand undertake all formalities in regards to disclosurerequirements;

- and, in general, take all measures and perform allformalities required to ensure the completion of thecapital increase and amend the bylaws in consequence.

The shareholders duly note that this authorizationreplaces and supersedes, for the unused portion, theauthorization granted by the shareholders’ meeting of April 27, 2007 and implemented for a total amountof €6,936,258 by the respective decisions of the Boardof Directors of June 12, 2007 and June 13, 2008.

This authorization is granted by the shareholders for 26 months.

Twelfth resolution

Authority granted to the Board of Directors to increasethe capital stock by issuing ordinary shares with orwithout shareholders’ preemptive rights (€10 million)

The shareholders, in accordance with the conditionsof quorum and majority that apply at extraordinaryshareholders meetings, after having reviewed theBoard of Directors’ report, and in compliance withthe provisions of articles L.225-129-2 of the FrenchCommercial Code:

- vest the Board of Directors with the authority toincrease the capital through one or more transactionsin amounts and at such times it chooses, to issue newordinary shares paid for in cash or by offsetting debtdue and payable, with or without additional paid-incapital;

- grant the authorization provided for under thisresolution for 26 months or until June 24, 2011 onwhich date it shall be considered to have lapsed if notused by the Board of Directors and duly note that thisauthorization cancels from this date onwards the previousauthorization granted by the thirteenth resolutionshareholders’ meeting on April 20, 2007 with this samepurpose, i.e. authorizations to issue stock withoutprejudice to shareholders’ preemptive rights;

- decide that the nominal value of capital increasesauthorized under this authorization may not exceed€10 million, where this amount is included in the maximum for capital increases authorized underthe fifteenth resolution. This amount may be increasedas necessary, by the nominal amount of additionalsecurities that must be issued to preserve, as requiredby law the rights of holders of securities conferringrights to equity securities of the company;

- decide that shareholders qualify in proportion tothe number of shares they hold for preemptive rightsto subscribe to new shares issued under this authorization


on the basis of exact rights (à titre irréductible). In addition, the Board of Directors may grant shareholders the right to subscribe to excess shareswithout trading rights (à titre réductible) over andabove the shares they were entitled to by exercisingtheir exact rights, in proportion to said rights andwithin the limit of their demand;

- decide that the Board of Directors shall set the issueprice of the ordinary shares according to proceduresestablished by applicable laws and regulations;

- duly note that, if subscriptions for new shares on the basis of exact rights, and as the case may be,for excess shares, should fail to account for the entireissue, the Board of Directors may in the order it shalldetermine, have recourse to one and/or another ofthe following possibilities:

- reduce the number of securities issued, in accordancewith the law, to the number of applications received,provided that such applications are for at least threequarters of the intended amount;

- freely distribute all or part of the shares issued butnot subscribed;

- offer to the public all or part of the shares issuedbut not subscribed.

- hereby note that the Board of Directors may automatically and in all cases limit the stock issuedecided to the amount of shares subscribed when sharesnot subscribed represents less than 3% of the issue;

- decide that the Board of Directors shall be grantedthe authority, which the latter may further delegatein accordance with the law, to implement this resolutionand notably to:

- decide to proceed with the capital increase;- decide the amount of the capital increase as wellas the amount of additional paid-in capital that maybe requested;- set the number of new shares to be issued, the datefrom which new shares shall be entitled to dividendsincluding retroactively and the procedures of payment;- set the conditions for exercising rights associatedwith the shares, and notably those concerning thesale or trading of subscription rights of shares issued;- conclude all agreements, notably with credit institutions, to ensure that any issue carried out byvirtue of this authorization is properly carried out;- receive subscription requests for new shares andthe corresponding payments;- record completion of the capital increases thatmay be carried out through the issue of new shares,perform all resulting formalities, amending the articlesof incorporation and bylaws in consequence;- request that the new shares be admitted for tradingin a regulated market;- charge all costs to paid-in capital as deemedappropriate and notably costs, rights and fees incurredin connection with the issue and appropriate fromthis amount funds necessary to raise the legal reserveto one tenth the new capital after each issue;- and in general, define all terms and conditionsand proceed with all useful measures and formalitiesnecessary for the issue.

Thirteenth resolution

Authority granted to the Board of Directors to increasethe capital stock by issuing ordinary shares suspendingshareholders’ preemptive rights (€10 million)

The shareholders, in accordance with the conditionsof quorum and majority applicable to extraordinaryshareholders meetings, and after reviewing the reportof the Board of Directors and the special report ofthe Auditors and in compliance with the provisionsof articles L.225-129-2, L.225-135, L.225-136 et seq.of the French Commercial Code:

- vest the Board of Directors with the authority toincrease the capital through one or more transactionsin amounts and at such times it chooses, by issuingin France new ordinary shares paid for in cash or by offsetting debt due and payable, with or withoutadditional paid-in capital;

- grant the authorization provided for under thisresolution for 26 months or until June 24, 2011 onwhich date it shall be considered to have lapsed if notused by the Board of Directors,

- duly note that this authorization cancels from this date onwards the previous authorization grantedby the thirteenth resolution of shareholders’ meetingon April 20, 2007, not used to date and with the samepurpose, i.e. authorization to issue stock entailing the cancellation of shareholders’ preemptive rights;

- decide that the nominal value of capital increasesauthorized under this authorization may not exceed€10 million, where this amount is included in the maximum for capital increases authorized under the fifteenth resolution. This amount may be increased as necessary, by the nominal amount of additional securities that must be issued to preserve, as required by law the rights of holders of securities conferring rights to equity securities of the company;

- cancel shareholders’ preemptive rights to subscribefor shares to be issued in accordance with applicablelaws and regulations and grant full authority to the Boardof Directors to provide for a preferential subscriptionperiod and set said period according to the durationprovided for by article L.225-135 of the FrenchCommercial Code. This preemptive right does notgive rise to the creation of negotiable rights and maybe exercised, as the Board of Directors considersappropriate, in proportion to the exact number ofshares owned by each shareholder (à titre irréductible)or by application for excess shares without tradingrights (à titre réductible);

- decide that the Board of Directors shall set the issueprice of the ordinary shares according to proceduresestablished by applicable laws and regulations, andnotably the provisions of article L.225-136 of the FrenchCommercial Code;

- decide that if subscriptions for new shares, includingthose of existing shareholders fail to account for the entireissue the Board of Directors may reduce the amountof the issue in accordance with the law in force onthe date of the transaction;


- decide that the Board of Directors shall be grantedthe authority, which the latter may further delegatein accordance with the law, to implement this resolutionand notably, for each capital increase concerned to:

- decide to proceed with the capital increase;- decide the amount of the capital increase as wellas the amount of additional paid-in capital that maybe requested;- set the number of new shares to be issued, the datefrom which new shares shall be entitled to dividendsincluding retroactively and the procedures of payment;- conclude all agreements, notably with credit institutions, to ensure that any issue carried out byvirtue of this authorization is properly carried out;- receive subscription requests for new shares andthe corresponding payments;- record completion of the capital increases thatmay be carried out through the issue of new shares,perform all resulting formalities, amending the articlesof incorporation and bylaws in consequence;- request that the new shares be admitted for tradingin a regulated market;- charge all costs to paid-in capital as deemedappropriate and notably costs, rights and fees incurredin connection with the issue and appropriate fromthis amount funds necessary to raise the legal reserveto one tenth the new capital after each issue;- and in general, define all terms and conditionsand proceed with all useful measures and formalitiesnecessary for the issue of shares.

Fourteenth resolution

Authority granted to the Board of Directors to increasethe number of shares to meet excess demand in response to capital increases with or without shareholders’ preemptive rights

The shareholders, in accordance with the conditionsof quorum and majority applicable to extraordinaryshareholders meetings, and after reviewing the reportof the Board of Directors and the special report of theAuditors and in accordance with provisions of articleL.225-135-1 of the French Commercial Code:

- decide that the Board of Directors shall be authorizedwith the possibility of further delegating to any personso authorized by law, to increase the number of sharesto be issued in connection with a capital increasemaintaining or suspending shareholders’ preemptiverights in accordance with the preceding twelfth andthirteenth resolutions, within the limit of the percentageof the initial issue which shall be determined inaccordance with applicable laws and regulations, itbeing specified that “overallotted” shares will be issuedat the same price as shares of the initial offering;

- decide that the nominal amount of the capital increasedecided by virtue of this resolution shall be subject to the limits, when applicable of the aggregate nominalamount set above by point three of the twelfth andthirteenth resolutions;

- grant the authorization provided for under thisresolution for 26 months from the date of this meeting,or until June 24, 2011, on which date the authorizationshall be considered to have lapsed if not used by theBoard of Directors;

- duly note that this authorization cancels as of todayand replaces the previous authorization granted bythe thirteenth resolutions of the shareholders’ meetingof April 20, 2007, unused to date and destined forthe same purpose.

Fifteenth resolution

Maximum aggregate amount of capital increasesconferring present or future rights from authorizations

The shareholders by virtue of the preceding resolutions,in accordance with the conditions of quorum andmajority applicable to extraordinary shareholders’meetings and after reviewing the Board of Directors’report, set in accordance with article L.225-129-2 ofthe French Commercial Code, a maximum amountof €40,500,000 for present or future capital increasesby virtue of the authorizations granted to the Boardof Directors under the eleventh, twelfth, thirteenth,fourteenth and sixteenth resolutions, not includingthe consequences of adjustments that might be made,in compliance with the law pursuant to issuance ofsecurities conferring future rights to capital, it beingspecified within this limit:

- the capitalization of reserves covered by the twelfthresolution may not result in a capital increase of morethan €20 million;

- share issues maintaining the preemptive rights ofshareholders covered by the thirteenth resolution,after taking into account the number of shares issued,when applicable, in application of the fourteenthresolution, may not result in a capital increase of morethan €10,000,000;

- issues entailing the cancellation of shareholders’preemptive rights covered by the thirteenth resolution,after taking into account the increase in the numberof shares issued by virtue of the fourteenth resolution,may not result in a capital increase of more than€10,000,000;

- employee share issues covered by the sixteenth resolution may not result in a capital increase ofmore than €500,000.

All these amounts that remain subject to the maximumauthorized capital increase do not take into accountthe consequences of adjustments that might be made,in compliance with the law pursuant to issuance ofsecurities conferring future rights to capital.

Sixteenth resolution

Authority granted to the Board of Directors to proceedwith capital increases reserved for employees in accordance with article L.225-129 -6 of the FrenchCommercial Code and entailing the cancellation of shareholders’ preemptive rights

The shareholders by virtue of the preceding resolutions,in accordance with the conditions of quorum andmajority applicable to extraordinary shareholders’meetings and after reviewing the Board of Directors’report and the Auditors’ report in accordance witharticles L.225-129-2, L.225-129-6, L.225-138 and L.225-138-1 of the French Commercial Code andarticles L.3332-18 et seq. of the French Labor Code:


- grant authority to the Board of Directors Board of Directors, which the latter may further delegate as permitted by law, at its sole discretion, to increasethe capital, in one or more transactions in amountsand at times of its choosing to issue common stockreserved for employees of the company or affiliatedcompanies in accordance with applicable laws belongingto a company savings plan;

- waive in favor of employees entitled to benefit fromcapital increases that may be decided by virtue of thisauthorization, the preemptive rights of shareholdersto new shares that shall be issued;

- limit the maximum nominal amount of capitalincreases under this authorization to €500,000, it being specified that:

- this amount may be increased as necessary by the nominal amount of additional securities that mustbe issued to preserve, as required by law the rightsof holders of securities conferring access to equitysecurities of the company and;

- the nominal amount of capital increases permitted under this authorization is independentand distinct and as such not included under thelimits provided for under the thirteenth, fourteenthand seventeenth resolutions of the shareholders’meeting of April 20, 2007;

- grant full authority to the Board of Directors withinthe above limits and conditions for the purpose ofimplementing the authority hereby granted, includingnotably to:

- determine the list of grantees benefiting from the cancellation of preemptive subscription rights,the number of shares to be granted to each qualifyingemployee and the issue price, subject to the limitsimposed by article L.225-138-1 of the FrenchCommercial Code and L.443-5 of the French LaborCode, that may not exceed the average price of the20 trading days preceding the decision setting thebeginning of the subscription period, nor less than20% this average (or 30% when the waiting periodprovided for by the plan in accordance with articleL.443-6 of the French Labor Code is greater thanor equal to 10 years);

- determine the dates and procedures for the capitalincrease(s);

- receive applications for shares and determine theprocedures for their payment;

- produce a supplemental report describing the finalterms of the offering, and in general, take all measuresand undertake all formalities required for the issue,the listing of the securities and custodial and relatedservices for securities covered by this authorization,and amend the articles of bylaws in consequence.

- grant the authorization provided for under thisresolution for 26 months from the date of this meeting.

Seventeenth resolution

Authority granted to the Board of Directors to reducethe capital by the cancellation of treasury shares

The shareholders, in accordance with the conditionsof quorum and majority that apply at extraordinaryshareholders meetings, and after reviewing the reportof the Board of Directors and the special report ofthe Auditors and the seventh resolution of the ordinarygeneral meeting of this day authorizing the companyto purchase its own shares.

- authorize the Board of Directors to cancel, at its owndiscretion, through one or more transactions, at amountsand times of its choosing, treasury shares acquiredwithin the framework of article L.225-209 of the FrenchCommercial Code, not to exceed 5% of the commonstock outstanding and by period of 24 months, reducingthe authorized capital in due proportion, in accordancewith applicable laws and regulations;

- this authorization is for eighteen months from this meeting and replaces the previous authorizationby the shareholders’ meeting of April 24, 2008, that was not used;

- grant full authority to the Board of Directors, with the possibility of further delegating to any personso authorized by law, through one or more transactions,to reduce the capital, to notably determine the finalamount of the capital reduction and the terms andprocedures and record the completion of the capitalreduction, amending in consequence the bylaws, performing all necessary formalities, and notablyfilings with all bodies and in general doing everythingnecessary.

Tenth resolution

Powers

All powers are granted to the bearer of copies or extractsof the minutes of this shareholders’ meeting ruling inaccordance with the conditions of quorum and majoritythat apply at extraordinary general meetings to performall legal formalities relating to the above resolutions.


72 Two thousand eight registration document Inter Parfums. History of the company

CHAPTER FIVE

History of the company

1982Creation of Inter Parfums SA in France by Philippe Benacin and Jean Madar

1985Creation of Inter Parfums Inc. in the United States, parent company of Inter Parfums SA.

1988Beginning of the selective perfume activity with the signature of a license agreement license for the Régine’s brandInitial public offering of Inter Parfums Inc on NASDAQ in New York

1993Signature of a license agreement to create and produce perfumes under the Burberry name and distribute them worldwide

1994Listing of Inter Parfums SA on the over-the-counter market of the Paris stock exchangeAcquisition of the Molyneux and Weil brands

1995Transfer of the company from the over-the-counter market to the Second Market of Paris stock exchange with a rights issue

1997Signature of a license agreement to create and produce perfumes under the S.T. Dupont name and distributethem worldwide

1998Signature of a license agreement to create and produce perfumes under the Paul Smith and distribute them worldwide

1999Signature of a license agreement to create and produce perfumes under the Christian Lacroix and distribute them worldwide

2000Extension of the Burberry license agreement

2004Signature of a new Burberry license agreement

2006Extension of the S.T. Dupont license agreementSignature of a license agreement for the Quiksilver and Roxy brands

2007Signature of a license agreement to create and produce perfumes under the Van Cleef & Arpels brand and distribute them worldwide

2008Extension of the Paul Smith license agreement

73Two thousand eight registration document Inter Parfums. History of the company

74 Two thousand eight registration document Inter Parfums. Auditors and responsibility statements

CHAPTER SIX

Auditors andresponsibilitystatementsAuditors 75

Responsibility statement for the registration document 75

75Two thousand eight registration document Inter Parfums. Auditors and responsibility statements

AuditorsThe statutory auditors having issued reports on the parent company and consolidated financial statements are:

Mazars SFECO & Fiducia Audit

61, rue Henri Regnault 50, rue de Picpus92400 Courbevoie 75012 Parisrepresented by Denis Grison represented by Gilbert Métoudiappointed by the AGM of December 1, 2004 appointed by the AGM of May 19, 1995reappointed by the AGM of April 20, 2007 reappointed by the AGM of April 20, 2007expiration date: 2013 AGM expiration date: 2013 AGM

The alternate auditors are respectively:

Mr Guillaume Potel Mr Serge Azan

61, rue Henri Regnault 16, rue Daubigny92400 Courbevoie 75017 Parisappointed by the AGM of December 1, 2004 appointed by the AGM of May 19, 1995reappointed by the AGM of April 20, 2007 reappointed by the AGM of April 20, 2007expiration date: 2013 AGM expiration date: 2013 AGM

Auditors’ fees are described in section 6.7 of the notes to the consolidated financial statements.

Responsibility statement for the registration documentI hereby certify that, to my knowledge and after all due diligence, the information contained in thisregistration document is true and accurate and contains no omissions likely to affect the import thereof.

I declare that, to the best of my knowledge, the financial statements have been prepared in accordance withthe applicable financial reporting standards and give a true and fair view of the assets and liabilities, financialposition and results of the operations of the company and that the management report included thisRegistration Document faithfully presents business trends, the results and financial position of the companyand the description of the main risks and uncertainties.

I have obtained a completion of work letter from the statutory auditors in which they indicate that they haveverified the information concerning the financial situation and accounts presented in this registrationdocument and read the entire registration document.

Philippe Benacin Chairman and Chief Executive Officer

Responsibility for financial information

Philippe Santi Executive Vice President & Chief Financial and Administrative Officer

To receive information or be added to the company’sfinancial communications mailing list contact:Investor Relations department

Karine MartyTelephone: +33 8 00 47 47 47Fax: +33 1 40 74 08 42Via the website: www.inter-parfums.fr

To receive information or be added to the company’sfinancial communications mailing list contact:Investor Relations department

Karine MartyTelephone: +33 8 00 47 47 47Fax: +33 1 40 74 08 42Via the website: www.inter-parfums.fr

76 Two thousand eight registration document Inter Parfums by Agence Marc Praquin